Bank of Springfield, the primary financial institution for the cannabis industry in Illinois, is closing all accounts associated with marijuana businesses, effective May 21.
The Chicago Tribune first reported this story this week, pointing out that bank executives had been mulling the decision for a few months.
Bank of Springfield spokesperson Andrew Mack told Cannabis Business Times that the board of directors took a number of issues into consideration, including U.S. Attorney General Jeff Sessions’ Jan. 4 repeal of the Cole Memo.
“When Illinois jumped into the fray a couple of years ago, things really seemed to be moving in a general direction,” he said. “The Cole Memo provided a lot of guidance and assurance—and then the Rohrabacher-Blumenauer amendment—and more and more states were moving toward serving the cannabis industry. The rhetoric coming out of Washington and then the actions by the attorney general rescinding that memo just really shook the bank.”
The Illinois General Assembly first passed the Compassionate Use of Medical Cannabis Pilot Program Act in 2013. Sales began in November 2015.
“They didn’t arrive at the decision lightly,” Mack said. “Banks, by nature, are pretty conservative. They have a lot of other customers outside of the cannabis industry. They just thought that it was most prudent to step back from the issue, and they arrived at the decision to pull out.”
According to the Illinois Department of Financial and Professional Regulation, Illinois has 54 active dispensary licenses, and industry database Cannabiz Media lists 21 active cultivator licenses. Mack could not say how many cannabis businesses this will affect, citing the confidential nature of the letter.
As part of a broader sense of financial uncertainty in the industry, the Bank of Springfield news will cause a shakeup in the normal course of business. The Tribune reports the state’s medical marijuana program generated $8.5 million in sales in February of this year.
“For the industry at large, it’s a real kind of punch in the gut,” Jeremy Unruh told the newspaper. Unruh is the director of public and regulatory policy at PharmaCann, which owns two cultivation centers and four dispensaries. “If you’re a dispensary, you need to pay for a wholesale product, and you don’t have a bank. How do you do it? That transaction might have to be in cash.”