The cannabis industry is an exciting business filled with interesting people, Curaleaf executive Patrik Jonsson said, but it’s also extremely difficult and unforgiving. “I wake up every morning knowing I’m getting slapped in the face,” Jonsson said, quoting a business partner. “I don’t know by who, and I don’t know when, but I know I’m […]
The cannabis industry is an exciting business filled with interesting people, Curaleaf executive Patrik Jonsson said, but it’s also extremely difficult and unforgiving.
“I wake up every morning knowing I’m getting slapped in the face,” Jonsson said, quoting a business partner. “I don’t know by who, and I don’t know when, but I know I’m getting slapped in the face.”
Speaking at a Nov. 3 event hosted by the Hartford Business Journal in Farmington, Jonsson, Curaleaf’s regional president for the Northeast region, talked to an approximately 150-person audience, including people interested in entering the state’s recreational marijuana market.
He was joined by Shipman & Goodwin lead cannabis group attorney Sarah Westby, who said those starting a marijuana business today can find some banking opportunities and private investors, but they should consider segments of the industry with less overhead and complications than production.
It’s well-known that access to financial services is an obstacle for cannabis businesses because the substance remains federally illegal; banks regulated by the Federal Deposit Insurance Corp. (FDIC) are forbidden from working with marijuana companies. Jonsson said this issue was especially acute a few years ago when he was starting a grow operation in Massachusetts.
“When we first started, we got an account with Bank of America, it took us probably about two months, and that account got shut down, and they held our money for quite a while,” Jonsson said. “Two years after that, my personal bank account with Citizens Bank … got shut down because I got paid by Curaleaf.”
Westby, who represents a growing list of clients in the cannabis industry, cited the risk financial institutions take in banking marijuana companies.
On the other hand, credit unions are overseen by the National Credit Union Administration (NCUA), which released guidelines in 2019 allowing the industry to provide services and even lend to legally-operating cannabis companies. But credit unions that serve the industry have stringent reporting requirements that create some risks.
Providing services to cannabis companies used to be a third rail for financial institutions, Westby said, but that’s starting to change.
“My firm does work with one bank in Connecticut that is willing to take on cannabis clients,” said Westby. “There are slowly but surely some players in the finance industry who see the opportunity and are willing to take on the risk.”
Finding real estate can also be a difficult process, Jonsson said, noting that some landlords with bank mortgages are restricted from leasing to companies that make or sell a federally illegal drug. Meantime, some municipalities have permanently or temporarily banned the industry.
