Despite unlikely allies, cannabis industry struggling with debanking

The U.S. cannabis industry might have finally found a receptive audience in Washington, D.C., to hear its pleas after years of facing debanking incidents nationwide.

The debanking issue rekindled national attention in December on the Joe Rogan podcast with noted venture capitalist Mark Andreessen, who both pushed the theory that conservatives were explicitly targeted.

President Donald Trump soon followed with charged comments, prompting a viral campaign joined by some prominent marijuana executives, including Flowhub founder Kyle Sherman and Kim Rivers, CEO of Florida-based Trulieve Cannabis Corp.

Rivers, who attended a few inauguration dinners and celebrations after Trump’s election victory, blasted Bank of America on X after the financial giant posted a tweet saying it welcomes conservatives and wouldn’t close accounts for political reasons.

She did not respond to MJBizDaily requests for comment.

Meanwhile, Wyoming Republican Sen. Cynthia Lummis brought up the issue on Fox Business, specifically mentioning the U.S. cannabis industry.

“At that point, I knew that we were getting some visibility and attention,” Sherman told MJBizDaily.

Giving the Senate Banking Committee an earful

The following day, Sherman, while testifying to the Senate Banking Committee at the U.S. Capitol, highlighted the urgent need for cannabis banking reform to protect legal operators from unfair financial discrimination.

Sherman provided firsthand accounts of Flowhub’s ongoing debanking challenges, despite the Denver-based software company’s standing as a federally legal business.

He told the committee that a senior Flowhub engineer was denied a mortgage from a credit union because of his source of income, nearly costing the family the home.

In addition, he told the committee and MJBizDaily, his employees routinely face:

• Personal and business account closures.
• Home equity loan and refinancing denials.
• Predatory lending terms, fees and rates.
• Asset seizures.

Flowhub has been debanked several times, Sherman testified, forcing the company to scramble to find “temporary stopgap solutions.”

He reignited calls to bring the SAFER Banking Act to a vote in the Senate.

Calls to action for firsthand debanking tales

Prompted by an invitation from Senate Banking Committee Chair Tim Scott (R-South Carolina) to gather debanking stories via email (repwhistleblowers@banking.senate.gov) or phone (202-224-4287), Flowhub developed a centralized hub to collect firsthand accounts from cannabis workers, executives and companies.

More than 110 debanking testimonials have been submitted to the banking committee through Flowhub, ranging from plant-touching operators to snowplow operators.

“It disrupts your entire business,” Sherman told MJBizDaily.

“We’ve largely learned our lesson, and now we have multiple institutions that we work with.

“So, if one drops us, we can move to a different one.”

Another marijuana tech company targeted

Cannabis tech company Rank Really High also has faced banking and payroll-processing issues since it launched nearly four years ago.

The Massachusetts-based firm developed a cannabis e-commerce and marketing platform used by more than 400 marijuana retailers in the United States and Canada that connects to their point-of-sale system and allows them to build websites, similar to Shopify.

Despite its profitability, the software maker’s association in the cannabis industry led Paychex, Intuit Quickbooks and Bills.com to cut their services, according to Rank Really High co-founder and CEO Dan Mondello.

New York-based Paychex informed customers in late March 2023 that it was halting direct deposits and other payroll services for marijuana-related businesses, according to a memo obtained by MJBizDaily.

And, last year, Rank Really High was denied a bridge loan from a bank that markets itself as being cannabis-friendly, he said.

“They decided to pull the plug at the last minute,” said Mondello, who declined to identify the bank.

Banking challenges ‘a failure of government’

Since Glass House Brands was established in 2015, co-founder Graham Farrar said his personal bank accounts have been shuttered at Wells Fargo, Bank of America and JPMorganChase, which also canceled a personal credit card of his a few months ago.

The big banks also denied a mortgage loan, forcing Farrar to turn to a smaller bank, which meant higher interest rates.

“Every month I’m paying 30% more than somebody else would pay,” Farrar told MJBizDaily.

Despite a 20-year relationship with Citibank, Glass House co-founder Kyle Kazan’s Citi AAdvantage Business World Elite Mastercard was shuttered in November 2023, according to a letter viewed by MJBizDaily that cited “an association with a cannabis company.”

Of course, such banking challenges are bothersome personally, but they are magnified operationally, particularly with the known dangers of burglaries and violent crimes involving cash-heavy businesses such as marijuana stores.

“It pales in comparison to people that have literally lost their lives or have been brutally hurt,” said Kazan, a former police officer in the Los Angeles suburb of Torrance.

“This is such a failure of government.”

Jason Vedadi, the CEO of Arizona-based Story Cannabis, last year received a letter from U.S. Bank notifying him that it planned to shut down all his family accounts, including credit cards.

After wrangling with representatives, he said the bank ultimately let his wife maintain the personal account after his name was pulled from it and he closed 17 business accounts.

“I’ve been banking with U.S. Bank since I’ve been 18 years old,” said Vedadi, whose company operates 18 retail stores in Arizona, Maryland and Ohio.

Since opening the door of Dejavu Cannabis Co. in 2019 on Alaska’s remote Kodiak Island, Andrew Sablon said his personal bank accounts and credit cards have been abruptly closed by Credit Union One, Key Bank and Alaska USA Federal Credit Union, which changed its name in 2023 to Global Credit Union.

The credit card debt he accumulated while building the business once eclipsed $15,000, but consolidation has slowly diminished the principle.

To compound matters, his store drew customers from a popular bar within walking distance that closed in November and is on the market.

“My whole winter I’ve been stuck behind a closed establishment,” Sablon told MJBizDaily.

“There’s no way I can even get a business loan so I can figure things out and have a little cushion.

“It’s just terrifying.”

MJBizDaily omitted the names of Sablon’s latest banks because of his concerns of reprisal.

Debanking concerns linger

It’s been years since Jesse Redmond had banking issues, but the experiences left a mark.

Before California enacted comprehensive regulations in 2018 for recreational sales, his medical collective in Santa Barbara County was debanked twice.

That forced the company to make financial transactions through prepaid, high-fee gift cards, including bulk buys of glass jars at Walmart.

As an industry analyst and consultant, Redmond was required to answer questions in-person from an office manager at his credit union about income and business operations.

In January, he was appointed head of investor relations and business development at Leef Brands, which has marijuana cultivation and manufacturing licenses in California.

Redmond’s first paycheck was processed without issue, though his concerns persist.

“I don’t know how working for a state-legal operator like Leef would affect me if I was trying to buy a car or get a mortgage,” he said.

“But it’s definitely something that’s on my mind.”

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.