Barriers to Banking in the Cannabis Industry

Despite cannabis being legal both recreationally and medically in the state of Oregon, there are still many barriers regarding cannabis not being federally legal. One of those barriers is banking.

Currently, there are only two banking institutions in Oregon that allow cannabis business accounts, which are WAUNA Credit Union and MAPS Credit Union. It is important to note that traditional “banks” are federally regulated institutions that will not accept cannabis business accounts due to cannabis still being illegal federally. Credit Unions, on the other hand, have different rules and tend to be regulated by the state where they are located, meaning that some have the ability to accept cannabis-related bank accounts.

Due to the small number of credit unions that accept cannabis business accounts, prices to open an account are extremely high. Paul Hampshire, the owner of Eugene-based cannabis processor Full Circle Extraction Co., said, “Normal business bank accounts with a normal bank may cost you, for a small business, $15 to $50 a month. To have a cannabis bank account, it’s ten times that. It’s closer to $400 to $500 per month just to have the account. That’s another huge unnecessary hardship that a lot of small businesses have to take on.”

While paying $400 to $500 monthly for a bank account may be manageable for larger businesses, it can cause an issue for smaller businesses within the cannabis industry. Many of these businesses are already struggling to compete in today’s cannabis market. Smaller businesses within the cannabis industry could benefit from receiving financial help from banking institutions, like many similar businesses in any other industry.

Oregon cannabis attorney Paul Loney said, “Some of these businesses that are kind of struggling right now, and if they could get like a loan it could allow them to make it through this rough patch.” Unfortunately, the credit unions that do accept cannabis businesses in Oregon do not issue loans to their clients. This means that if cannabis businesses are in need of a loan they must find an alternative other than a bank or credit union. “They have to go to private lenders which cost a lot of money, which is not good,” Loney said.

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While banking itself causes issues for businesses in the cannabis industry, not having an account is an even bigger problem. Rick Harder, owner of Eugene-based cannabis producer Oregon Cannabis Authority, experienced these issues around a year ago when attempting to pay taxes without having a cannabis business account. According to Harder, at the time, if you owned a cannabis business without a bank account for the business, taxes had to physically be paid in cash to the Department of Revenue. For Harder, however, the Department of Revenue would not accept the thousands of dollars in cash that Harder had on hand, as a result of running his business without a bank account.

“We actually ended up having to call Senator Merkely, because we had now two quarterly payments, tens of thousands of dollars to go and deliver to the federal government and no way to get it to them. I don’t know why we can’t have the SAFE Banking Act passed so we can actually have bank accounts that we don’t have to pay money for,” Harder said.

The SAFE Banking Act, which Harder mentioned, was introduced on March 7, 2019, and looks to legitimize cannabis businesses within the banking industry by prohibiting federal banks from refusing cannabis-related business on the grounds that the business is part of the cannabis industry. The SAFE Banking Act has passed the House three times, in 2019, 2021 and 2022, but still failed to make it any further.

While there are many issues that still exist for the cannabis industry as a result of cannabis still being federally illegal, banking continues to be a major problem for many of those within the industry. “For the people that just want to have a business, follow the rules, pay our taxes: why is it so difficult to do that?” said Harder.

Editor’s note: Green Eugene reached out to WAUNA Credit Union, MAPS Credit Union, the Department of Revenue and the Department of Treasury but did not receive a comment in time for publication. Any changes will be reflected in the online version of this story.

Picture this. You’re walking through the Eugene Saturday Market on a beautiful spring day. A cool breeze rustles the freshly-bloomed leaves on the maple trees. You can hear the drum circle echoing through the park blocks, and smell the aroma of weed and authentic, local food that lingers in the air. You look around at the art for sale eyeing the kaleidoscopes, bongs and psychedelic paintings. Eugene residents in tye-dye shirts are dancing their hearts out. You wonder to yourself: When did Eugene become the epitome of the hippie movement?

You can thank the renowned author and leader of the ‘60s counterculture movement, Ken Kesey. As a Eugene local and an alum of the University of Oregon, Kesey found numerous ways to leave a legacy in his hometown.

Kesey was born in 1935 in La Junta, Colorado. Shortly after, his family relocated to the Eugene area. However, Kesey’s initial attraction to the counterculture movement didn’t occur in Eugene but began after he was offered a prestigious scholarship for a writing program at Stanford University. A major shift in Kesey’s personality and writing style occurred when he became a paid subject of lysergic acid diethylamide (LSD) experiments, according to history writer Robert McNamara from ThoughtCo. This led Kesey to become fascinated with the potential for cognitive changes in the mind after ingesting hallucinogenic drugs.

Kesey’s creativity flourished in combination with psychoactive chemicals. Soon after, his career took off as a result of his newfound inspiration from LSD, according to McNamara. After writing “One Flew Over the Cuckoo’s Nest” in 1962, Kesey’s rebellious, nonconforming attitude encompassed his reputation. It was no surprise when Kesey set off on a cross-country road trip with a group of his eccentric friends. The group named themselves the Merry Pranksters; they drove thousands of miles in an exuberantly painted school bus that they named “Furthur.” The Pranksters traveled with copious amounts of the then-legal drug LSD and claimed to be filmmakers anytime they were pulled over by police on their trip — pun intended.

The Pranksters eventually made the journey back to the West Coast in 1965 in order to hold a series of bizarre parties they coined “The Acid Tests.” At this point, the Pranksters established themselves as a well-known group of individuals who decided to abandon the status quo. People from all different walks of life attended their parties including poet Allen Ginsberg and journalist Hunter S. Thompson. The Merry Pranksters’ experiments with multi-media art projects, psychedelics and free-form rock music (ever heard of the Grateful Dead?) were further solidified in Tom Wolfe’s 1968 novel, “The Electric Kool-Aid Acid Test.” Kesey and the Pranksters became

Written by Nina Mathieu

Photographed by Violet Turner

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