Vermont will not be the first state in the Northeast to roll out a well-regulated and transparent recreational cannabis market. That fact is a loss for the state and the regional business community. While Vermont waits to roll-out a pathway to recreational cannabis, the wheels of progress here and elsewhere continue to move forward.
Every day another state approves medicinal use, or recreational cannabis, or expands research, or clarifies rules for industrial hemp farming and its sale as another step towards the regularizing of a booming market. That market has needs. There is money to be made supporting those who are bringing bud to market. Very soon, businesses associated with commercial cannabis and industrial hemp will simply be Vermont businesses, and any novelty they may have once have had as marijuana businesses will fade away. What will be left are throngs of garden-variety local businesses, and if that sounds boring or ordinary, that would be the point.
Above all, commerce ought to be predictable and stable. We are, after all, talking about people’s livelihoods here. To that end, we need to talk about banking services for vendors and purveyors in the cannabis sector. Currently, many of these businesses deal in cash. Financial institutions regulated at the federal level have steered away from working with marijuana clients, fearful they might lose FDIC accreditation and open themselves up to any number of legal liabilities, were the government to crack down on the “ill-gotten” gains from a prohibited industry. As a result, local dispensaries, industry nonprofits, testing facilities, and even some hemp cultivators operating in the Vermont market struggle to access the necessary financial services and resources.
This encompasses everything from difficulty accessing loans and startup capital to business expansion. These operators are forced to work primarily or exclusively in cash, paying workers and providers in cash because they can’t open a simple checking account. Financial institutions, subject to oversight by federal regulators, are subject to federal law. Accepting monies from the sale of a product the federal government considers contraband creates multiple questions that need to be settled in a court of law at the national level.
This financial mess creates challenges at the federal level but creates an opportunity for Vermont-chartered financial institutions. Lending institutions regulated solely by the state of Vermont should be prohibited from denying banking services to cannabis and hemp industry businesses operating in compliance with state laws and regulations. The benefits of such a law would be significant.
The legitimacy of cannabis and hemp operators relies on their ability to engage with other vendors and financial institutions in the broader business ecosystem. Regulation and guaranteed access to financial services would create an effective pathway to regularizing industry commerce within and between the cannabis sector and the lawful economy at large; a change that would most certainly serve both public and state interests.
Grow operations are not the only ventures meant to serve the cannabis industry. The ancillary services affiliated with the cannabis industry (marketing, design, packaging, testing, and media to name just a few) currently make up a large portion of this dynamic and growing market sector. We want these services based in Vermont, creating jobs for Vermonters. And in order to encourage such businesses to establish themselves here, we need to foster an economic environment conducive to their success.
Ultimately, it is in everyone’s interest that our local cannabis industry is viewed as just another routine function of our agricultural economy. To that end, Vermonters have an abiding interest in regularizing access to capital and liquidity for these commercial vendors. As a matter of fiscal responsibility, it is essential that both the Legislature and Governor Phil Scott’s administration support the continued growth of these enterprises. The next step in growing Vermont’s cannabis industry broadly and sustainably requires that they pursue legislation ensuring easy and orderly access to local financial institutions.
Editor’s Note: Steve May is a licensed independent clinical social worker specializing in addiction medicine, a member of the Vermont Coalition to Regulate Marijuana Advisory Board, and a member of the Richmond Selectboard.