Marijuana Businesses Sue to Gain Access to Financial Services

Massachusetts businesses say federal law interferes with intrastate commerce.

David Baumann


Oct 30



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David Baumann

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David Baumann

A squiggly pink arrow pointing downward and to the right.
A marijuana leaf atop a hundred dollar bill.

Arguing that the federal law that prevents them from accessing financial services is unconstitutional as long as they do business only in their home state, a group of Massachusetts marijuana businesses filed suit last week against U.S. Attorney General Merrick Garland.

“While regulated marijuana businesses are legal under state law, they are deemed illegal under federal law, and financial institutions that serve those businesses can themselves face prosecution or regulatory action,” Canna Provisions, Gyasi Sellers, Wiseacre Farms and Verano Holdings Corp. said, in their suit filed in U.S. District Court for the District of Massachusetts.

Intrastate Commerce

While Congress has authority to ban marijuana from interstate commerce, it has no police power over marijuana grown, transported, and distributed in intrastate commerce.

“The threat by the federal government to enforce the Controlled Substances Act amounts to interfering in intrastate commerce,” the plaintiffs said.

Since marijuana is illegal on the federal level, financial services providers risk federal regulatory sanction for doing business with cannabis-related firms.

Committee Approved Legislation

The Senate Banking Committee recently approved legislation that would provide financial institutions providing services to those businesses with a regulatory safe harbor. Senate Majority Leader Charles Schumer, D-N.Y., has promised to bring that bill to the Senate floor.

However, even if it passes in the Senate, it faces an uncertain future in the Republican-controlled House.

Meanwhile, in their suit, the companies outline the problems that illegality on the federal level pose—including the lack of access to financial services.

Credit Card Issues

Many financial institutions simply refuse to conduct business with their companies, the plaintiffs said. In addition, credit card companies have said they will not process transactions related to marijuana businesses, they added.

They said that Mastercard and Visa are not philosophically opposed to marijuana—noting that the companies serve businesses in Canada.

After being dropped by credit card processors, the average amount that customers spent at Canna Provision’s stores dropped by about 30%, according to the lawsuit.

“Because many banks, insurance companies, and other providers refuse to work with state-regulated marijuana businesses, Canna Provisions has higher interest rates, insurance premiums, and payments for goods and services than it would if intrastate marijuana were not illegal under federal law.

Public Safety Problems

In the suit, the companies said that couriers delivering marijuana face public safety problems, since criminals know the business being conducted is all-cash. In addition, the couriers cannot be accompanied by an armed guard because people committing violations of the Controlled Substances Act while armed face severe penalties.

The plaintiffs ask that a federal judge rule that the Controlled Substances Act is unconstitutional as it is applied to intrastate business.

Marijuana Banking Not a Major Solution

One of the plaintiffs said that while marijuana banking legislation would help, it does not solve the larger problem.

"The application of the [Controlled Substances Act] to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions," said Darren Weiss, President of Verano. 

He said the plaintiffs are prepared to take their case all the way to the U.S. Supreme Court.

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