Banking dilemma kills medical cannabis business

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At least one company interested in operating in the state’s fledgling medical cannabis industry has pulled out because of the lack of options to legally handle banking transactions.

Frank Hartman is an attorney and lobbyist who said he was representing an in-state business that wanted to branch out into growing medical cannabis.

Under the medical marijuana bill passed by the West Virginia Legislature in 2017, medical cannabis growers must pay a $50,000 license fee to the state. However, Hartman said prospective growers must also demonstrate that they have at least $500,000 in liquid assets.

Hartman said two out-of-state investors had agreed to back the venture, but pulled out after state Treasurer John Perdue sent state officials a letter saying there was not a legal avenue to handle banking transactions related to medical marijuana because of conflicting federal and state law.

“They had investors lined up to finance that (venture),” Hartman said. “They had investors who were willing to stake that (amount of money). They were serious people.”

Late in the 60-day legislative session, the Senate proposed an amendment to House Bill 4345 that was intended to solve the medical cannabis banking dilemma by allowing the creation of credit unions to handle licensing fees and other transactions. However, the amendment died on the final night of the session.

Because the banking problem remained unsolved, Hartman said the investors who were willing to finance the local growing operation “just pulled out.”

“They said it’s just not worth the risk,” Hartman said.

Perdue is still looking for a solution to the banking dilemma. On Monday, he issued a request for information asking for banking solutions for sales, fees, licenses, taxes and other transactions related to state-sanctioned medical cannabis in West Virginia, and said he intended to send a letter to federal Treasury Secretary Steve Mnuchin asking for “clear banking guidance” on how to deal with marijuana-related transactions.

“The fact is that the fate of medical marijuana in West Virginia depends on how President Trump’s administration approaches the enforcement of marijuana and banking laws,” Perdue said. “At the very least, I want West Virginia to be treated like all other states that have implemented or started implementation of a medical marijuana program.”

U.S. Attorney General Jeff Sessions has said he intends to crack down on marijuana, which remains illegal under federal law despite being legalized in some form in 30 states.

Mike Stuart, U.S. attorney for the Southern District of West Virginia, has publicly said he intends to uphold federal law regarding marijuana.

“This U.S. Attorney will enforce federal marijuana laws,” Stuart tweeted in response to a newspaper article concerning medical marijuana. “Congressional mandate to be respected but if law is expanded beyond express mandate, this U.S. Attorney will aggressively take all possible action to protect public, children, citizens and communities.”

State Del. Mike Pushkin, D-Kanawha, a co-sponsor of House Bill 4345 and a strong supporter of the medical cannabis law, wants Gov. Jim Justice to add medical marijuana to the agenda for a special legislative session that could be called in May.

Otherwise, it might be 2019 before the Legislature can take any action to fix the banking problems with the state medical marijuana program.

Meanwhile, Perdue is asking treasurers in at least 10 other states to ask Congress to change federal laws regarding marijuana.

“I support the rights of my fellow West Virginians, and I recognize the need for medical marijuana as an option for people who are suffering,” Perdue said. “I want to do everything in my power to move our state toward a lawful solution. However, I want to be clear that there are real banking challenges at the federal level that my office may not be able to resolve alone.”

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