Exclusive: Wells Fargo closed my client's account over cannabis-related issues too
In light of the recent news that Wells Fargo Bank closed the account of Nikki Fried, a Florida politician running for AG Commissioner, over her association with the cannabis industry PotNetwork’s own Rick Schettino recalls a time when the same happened to his client. In this exclusive, first-hand account, Schettino details a practice that has been the norm for Wells Fargo for a number of years now.
A few years back, early in my own entry into the marijuana space, I was hired as a publicity and marketing consultant by a company with intentions of developing essential oil extraction technology. One of my assignments was to generate some early publicity for the company in the cannabis space. The founders were hoping to create some modicum of a media buzz for the company for the purpose of attracting cannabis producers and investors.
Being rather naive about the industry, neither I nor my client expected what happened next. Immediately after receiving some press coverage on cannabis-focused websites, the company received notice from Wells Fargo saying that their account was being closed and insisting that the company transfer all of its assets to another bank.
It didn’t matter that the company did not produce or sell a single cannabis product. Merely the association with the industry was enough to warrant the action. What was shocking to me, aside from the fact that the company was not producing or selling hemp, never mind marijuana, was how quickly after a story was posted that the bank took action.
My introduction to the cannabis industry interested me enough that I decided to focus my consulting practice exclusively on this space. It wasn’t long before I had a full slate of clients as well as reporting assignments with publications such as PotNetwork. In reporting on the industry it quickly became clear that this was not an isolated incident, but in fact, this was one of the major challenges with which the industry faced on a daily basis.
Non-profits face challenges as well
And it’s not just for-profit companies that need to be concerned. In June of 2017, a story broke about another bank, PNC, closing down an account of not-for-profit cannabis lobby group, the Marijuana Policy Project. The organization worked as an advocate for the legalization of cannabis for more than 22 years without a problem. Marijuana Policy Project spokesman Mason Tvert told CNNMoney at the time, "It's because we accept contributions from businesses or individuals who are involved with state-regulated marijuana businesses."
The latest news of the banking front is that Wells Fargo recently decided to drop an account connected to a political candidate in Florida who supports medical marijuana. Democratic candidate for Florida agriculture commissioner, Nikki Fried, a former lobbyist for the marijuana industry who accepted campaign contributions from companies in the sector, was ordered last week by Wells Fargo to take her campaign account funds elsewhere.
When pressed for their reasoning behind the action, Wells Fargo officials stated that “as a U.S. bank, Wells Fargo must comply with this law even if state laws differ. Therefore, it is Wells Fargo's policy not to knowingly bank or provide services to marijuana businesses or for activities related to those businesses.” (Emphasis mine.)
Activities related to the cannabis industry
The implication here is that any political candidate who advocates for the legalization of medical cannabis or has any connection with a cannabis-related business is in jeopardy of being dropped by Wells Fargo (and, presumably, other banks with the same concerns). They need not even accept campaign contributions from a cannabis-related business. They just need to be involved in “activities related to those businesses.”
Although there is a lot of talk from lawmakers about potential solutions to this issue, not one has yet made it off the drawing board. Just recently, an attempt to create a cannabis-friendly bank in California died on the vine. Senate Bill 930 would have allowed the state to license private banks to handle the billions of dollars being generated by California’s legal marijuana industry. The idea was that banks would issue checks to the businesses which could be used to pay rent as well as state and local taxes and fees. But a legislative analysis claimed that the proposal faced “significant obstacles.” The main obstacle was the same issue that any bank would face — no guarantee of protection from federal law enforcement. Back to square one.
Legislative fixes have been met with failure
Attempts to resolve the issue at the federal level have also been quashed. This past June, in a vote of 21 to 10, a U.S. Senate panel moved to block an amendment which would have shielded financial institutions from being punished by federal regulatory authorities for doing business with cannabis companies as long as those businesses are complying with state cannabis laws.
Senator Jeff Merkley (D-OR), the sponsor of the measure was attempting to attach the amendment to the Fiscal Year 2019 Financial Services and General Government funding bill. In a brief debate before the vote, Merkley reasoned that the banking issue is a problem “because it's great for organized crime, it's great for money laundering, it's great for theft and larceny, it's great for cheating on taxes, it's great for cheating on your payroll. We're really facilitating crime by not enabling the banking industry to provide basic services." The week prior, the House Appropriations Committee defeated a similar proposal.
Many stakeholders in government and the industry are resigned to the fact that resolution of this issue will require nothing short of an end to the federal prohibition of cannabis. The good news is that President Trump expressed that he would likely support legislation intended to hand regulatory control over cannabis to the states.
Whether we’re months or years away from a resolution to the problem is anyone’s guess at this point.
On a side note, Wells Fargo’s decision to close Fried’s account may cost them some business. Broward commissioner Mark Bogen says Wells Fargo’s actions are not in the interest of county residents, 76 percent of whom voted in support of the state’s medical marijuana constitutional amendment, and he suggested that the county stop doing business with Wells Fargo. He also claims that the action is a violation of Fried’s right to free speech.