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W W W. M A I N E B I Z . B I Z 19 J U N E 2 7 , 2 0 2 2 F O C U S B U S I N E S S O F C A N N A B I S W hile Maine was among the first states to legalize medi- cal cannabis in 1999, and later recreational use in 2016, canna- bis still remains illegal at the federal level. e discrepancy creates a host of legal issues and financial hurdles for Maine's cannabis industry, which has seen exponential growth since its first state-legal shop opened in 2020, puts banks in a tough position navigating murky waters, and creates a public safety concern. A federal bill waiting in committee for approval, the SAFE Banking Act, would give banks safe haven to provide financial services to cannabis businesses. But is it enough? A tangled web While some banks initially courted the industry in the early days of legal- ization, most have backed off, fearing federal penalties and even jail time for bankers. Now the cannabis industry, legal in 18 states and the District of Columbia for recreational use and 38 states for medical use, is mostly shut out of the banking system. In the first five months of 2022, sales of adult-use marijuana totaled $51.5 mil- lion, on pace to exceed last year's total of $82 million for 12 months, excluding medical-use marijuana, according to the state Office of Cannabis Policy data. Adult-use marijuana shops were first opened in Maine in 2020, when $4.3 million in sales were recorded. With the pace of sales, there's a grow- ing concern about where the money is being housed. In a day and age when debit and credit cards are taken at even the smallest businesses, most cannabis businesses still operate on a cash-only basis. Vendors and utility bills are fre- quently paid in cash. Large amounts of cash are often kept in safes or trans- ported in personal cars. "It becomes a safety issue," says CEO Andrew Silsby of Kennebec Savings Bank. "e cash ends up being transported in trunks of cars. ey need to be exceptionally careful about their routes because most folks now under- stand that it is a cash-centric industry and they're very vulnerable to having too much cash onsite." Joy Cutrone, CEO of Moment's Peace Craft Cannabis, a family- owned, York County cannabis farm in its first year of business, experienced first-hand the difficulties of working in a cash-only industry. "It's awkward," she says. "You have utilities, you have legitimate business expenses." She also noted of the wholesale business she operates with her son and husband in Hollis Center that it was impossible to work with some retailers without a bank account, and safety was another a big concern. "It's absolutely a priority to us that we keep ourselves and our employees safe, and the community around us safe," she says. at's why Cutrone ended up banking with a local financial institu- tion willing to do business with the industry, putting up with monthly fees that she says are 50 times what it would normally be for a small busi- ness. But she still needs to pay some contractors in cash. e ever-present concern is that cash-only businesses create an increased risk of money laundering and tax evasion. Despite the risks, a few local finan- cial institutions are doing deposit busi- ness with cannabis companies, but at a cost that can include steep monthly fees and percentage cuts. ose in the industry speculate the high charges go to covering the extra staffing costs that are required in investigating and report- ing on these accounts. Even if a bank has made the deci- sion not to work directly with cannabis businesses, as the industry becomes a bigger and bigger piece of Maine's rev- enue stream that money becomes more and more difficult to trace. If a bank suspects any deposited money comes from the cannabis industry it is required to investigate and report it to federal regulators. Even banks that are dealing with money from cannabis companies without knowing it and are still held responsible. For instance, if a land- lord collects rent from a tenant selling cannabis products, and then makes a deposit, both the landlord and bank face risk of federal consequences. is puts banks on higher alert with its cus- tomers, stretching staffing resources to remain in compliance. C O N T I N U E D O N F O L L OW I N G PA G E » AAAENERGY.COM S c arb orough, ME. // Pittsseld, ME // Auburn, NH Contact us to learn about customized HVAC-R service plans for your facility. SERVING CLIENTS SINCE 1948 DESIGN/BUILD SERVICES COMMERCIAL REFRIGERATION BUILDING CONTROLS HVAC, PLUMBING & ELECTRICAL MAINTENANCE PLANS Building efficiency. It's what we do. It becomes a safety issue. The cash ends up being transported in trunks of cars. — Andrew Silsby Kennebec Savings Bank

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