Illinois medical marijuana companies may have to deal in cash because the main bank serving them is withdrawing from the industry.
The Bank of Springfield informed cannabis clients last month it would close their accounts May 21, the Chicago Tribune reported .
Continue Reading Below
The decision to withdraw is tied to the reversal in January of a policy from President Barack Obama's administration that discouraged the prosecution of operators under state marijuana laws.
"The bank's stance is that protecting their customers is paramount," said Andrew Mack, a spokesman for the bank. "The Bank of Springfield will not jeopardize any of their customers by working with businesses that operate in the legal gray zone."
Many banks are hesitant to get involved in the industry because marijuana remains illegal under federal law. With the limited number of banks that serve the industry, many medical marijuana companies now face not having the bank accounts that can be used to pay their employees, vendors and the government.
"This is the closest we've been to being without banks in Illinois in this industry ... which isn't good," said Ross Morreale, co-founder of Ataraxia, which owns a cultivation facility in southern Illinois and co-owns three dispensaries. "It makes everything more difficult."
A Mount Prospect dispensary, New Age Care, has been operating solely with cash for about two years. The switch has been doable but has led to more security issues and logistical headaches, said David Knapp, its co-founder.
"At this point, we've got it down to a pretty well-oiled machine," Knapp said. "But if someone's used to paying with checks or electronically, they may be in for a little bit of a rude awakening."
The medical marijuana industry in Illinois had $8.5 million in retail sales in February, according to the state Department of Public Health.
Information from: Chicago Tribune, http://www.chicagotribune.com