Updated: 3:26 p.m., Sept. 12, 2016
Scotiabank and Royal Bank of Canada (RBC), two of Canada’s Big Five banks, have begun closing current accounts and turning away prospective account holders that have anything to do with the cannabis industry.
In a statement sent to Cannabis Business Times, AJ Goodman, director of external communications for RBC, said, “as part of our normal business practices, the bank periodically reviews the client relationships we have against several factors used to balance the benefits and risks associated with providing them with banking services.”
“For business banking clients, including those engaged in the production and distribution of medical marijuana, these factors include the nature of their business, their financial position and creditworthiness as well as other factors relevant to their specific business.”
Cannabis Business Times asked for clarification on what is meant by “nature of their business”, but have not received a response.
Canada has legalized medical marijuana at the federal level, so banks who do business with compliant medical marijuana business owners are not subject to federal penalties. Outside of moral objections and image concerns, there is no apparent reason for banks to shut down cannabis business accounts, says NORML Canada Communications Director Craig Jones.
Medical marijuana celebrated its 15th anniversary in the country this past July, while the Canadian government is currently working on the legislative framework for a recreational cannabis market, set to roll out next spring.
In an email to Canadian Press reporter Alexandra Posadzki, Scotiabank spokesperson Rick Roth said, “We consider our stringent risk management practices a key strength of our business.”
“This is why the bank has taken the decision to close existing small business accounts and to prohibit the opening of new accounts for customers classified as ‘marijuana-related business.’”
In a later statement to Cannabis Business Times, Roth added, "Should there be significant change to the legislation or regulation of this industry we will revisit our risk assessment and make risk policy adjustments if warranted."
But it’s not just cannabis business owners who are getting notices about their accounts being closed. According to the CP report, stores that deal with paraphernalia such as pipes and bongs are also being sanctioned.
“Nothing in the store that we sell is illegal,” said Hemp Country owner Nathan MacLellan to the CP. “Every single variety store sells pipes and bongs nowadays, so why are they singling us out all of a sudden?”