Banking remains a challenge for dispensaries post Ohio cannabis legalization
Sydney Dawes, Dayton Daily News, Ohio
4 min read
Aug. 23—Roughly 120 dispensaries in Ohio have received state licenses to sell recreational marijuana, but banking remains an obstacle for cannabis businesses because marijuana remains illegal under federal law.
"Financial institutions are nervous about working with marijuana companies because of the federal regulations," said Heather Trela, Rockefeller Institute of Government director of operations and cannabis policy expert. "Dispensaries don't have the same access to financial institutions that other organizations have."
In the Dayton area, dozens of dispensaries began selling cannabis to recreational customers this month. As the industry continues to grow in the region, area cannabis businesses are looking toward new ways to collect payments from their customers.
Beavercreek-based Wright-Patt Credit Union in 2018 confirmed plans to offer "limited banking services" to legally licensed medical marijuana businesses and as of April 2022 claimed to have the largest marijuana-related business market share in Ohio.
WPCU officials did not return calls for comment on whether they intend to operate in the recreational market.
The credit union website says they consulted with state agencies and elected officials before operating in the medical cannabis market.
"Without banking services, these businesses would be forced to operate on an all-cash basis, which can result in community safety issues and criminal activity," the WPCU website says.
"In addition, WPCU believes that legally operating businesses in Ohio have a right to banking services. With an emphasis on the safety of members and the communities the credit union serves, WPCU believes a responsibly banked industry is a safer industry."
Banking law and cannabis
Because cannabis remains illegal under federal law, banks outside of the state cannot back any transaction made with a dispensary.
"It's a hurdle to jump through, and (dispensaries) certainly come up with creative ways to work around it," Trela said.
In Ohio, some state-level changes made in the beginning stages of the medical marijuana program have allowed smaller financial institutions to handle finances for cannabis businesses.
In 2016, state lawmakers created provisions to allow banks, credit unions, savings and loan groups and other financial institutions to work with cannabis cultivators, processors, testing labs and dispensaries. The law states that financers could work with licensed medical marijuana businesses without violating state drug trafficking laws, as long as those businesses comply with state banking and tax laws.
Although rescheduling marijuana from a Schedule I to a Schedule III substance has been proposed by the Biden Administration, the reclassification of cannabis wouldn't directly affect access to banks, particularly for loans.
The Ohio Bankers League, a trade association for banks, and other financial groups have pointed to a measure called the SAFER Banking Act, which has passed in the U.S. House and stalled in the Senate.
"The prohibition for banks being able to provide financial services to the cannabis industry is about to get much more complicated with the expected explosive growth of the industry," the Ohio Bankers League shared in a press release during the first week of Ohio recreational sales. "It has never been more important for Congress to pass the SAFER Banking Act."
Cash-only business transforming
Dispensaries in the early days of legalization nationwide could only accept cash payments, but a growing number of cannabis businesses are finding new ways to facilitate transactions.
"It's not nearly as cash-heavy as it once was," said Eric Schneider, the managing director at New York-based cannabis risk management company Alpharoot. "Debit cards and payment processors have entered into the space. Companies don't have as much cash on hand."
And dispensaries typically don't want to have a large amount of cash on hand, Scheider said, as it puts the business at a higher risk of theft and can complicate bookkeeping.
Some dispensaries use apps to legally complete a sale with an in-store customer, while others have established a system where customers can deposit cash and receive store credit, Schneider said.
"Just in general, human beings gravitate towards cashless transactions. Whether it's buying stuff on Amazon or other e-commerce," Schneider said. "It's been a large challenge for our operators to get around."
Payment options at local dispensaries
Credit cards for now are mostly out of the question, as many major credit companies have policies against using a card to purchase products that are federally illegal. But dispensaries are increasingly accepting debit cards as an acceptable form of payment, said Tracey McMillin, the chief operating officer of Pure Ohio Wellness.
The cannabis company has dispensaries in Dayton and London and a grow facility in Springfield.
Pure Ohio Wellness began accepting debit card payments this month, a development that McMillin said eases the process for customers. Debit payments connect to the dispensary's point-of-sale system.
In east Dayton, AYR Dispensary accepts debit cards and has an ATM on-site. The dispensary also accepts payments through CanPay, an app-based cannabis sale system, according to AYR Wellness regional Senior Vice President Julie Winter.
Winter said strong relationships with state-chartered and regional banks are key for dispensaries trying to make moves under current federal law.
"Despite the progress made in cannabis, banking can still be tricky," she said.
