As the country lurches towards recreational cannabis legalization, Canada’s banking sector has developed a relationship with the country’s cannabis industries that is best described as slow-moving. While one major bank recently invested hundreds of millions into the cannabis industry; another is indicating that it wants nothing to do with weed-related money.
Pro-cannabis activists Jodie and Marc Emery have been polarizing faces of the Canadian legalization movement for nearly two decades. Last month, they were fined $195,000 after pleading guilty to several charges related to their Cannabis Culture chain of dispensaries, including possession for the purposes of trafficking. Last week, the Royal Bank of Canada terminated Jodie’s bank account.
Emery said she was given minimal information from the bank in a letter outlining that they are “no longer comfortable” with the banking arrangement, but that there was little other information provided.
“They didn’t ask me to explain deposits or anything,” said Emery. “It’s unfortunate and stressful. I still have banking to do. I have rent to pay.”
“I think it’s common that banks won’t deal with dispensaries, but Jodie’s done,” said Paul Lewin, a Toronto-based lawyer who specializes in cannabis law. “They’re just being jerks about it. Why banks are picking on her now, I don’t know.”
It is in some respects unsurprising. After her and her husband were arrested in Toronto last spring, Emery said the Bank of Montreal closed the bank accounts used to operate her Cannabis Culture head shop and media company, along with accounts associated with other Cannabis Culture franchises, which had started opening in cities across Canada.
Representatives at RBC and BMO would not comment on the individual cases. Jacqueline Zonneville, manager of corporate and public affairs for TD, said that the bank assesses applications “on a case-by-case basis” in an email.
“RBC currently does not provide banking services to companies engaged in the production and distribution of marijuana. We recognize that the legislative landscape is evolving and we are undergoing a review of our policies,” said AJ Goodman, a spokesperson for RBC, in a statement.
Goodman would not comment on RBC's process to identify accounts connected to crime and drug trafficking, but with a criminal record, Emery’s bank accounts would have been known to police.
In order to seize assets under the Controlled Drugs and Substances Act, police have to prove beyond a reasonable doubt that the money came from crime. Canadian banks are also subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, a complex statute that lays out banks’ responsibility to keep track of who their customers are and report suspicious transactions.
Canadian banks have not only terminated accounts liked to criminal activity. RBC's policy does not yet distinguish between legal and illegal cannabis. In 2015, the bank cancelled Canopy Growth’s accounts, even though the cannabis holding company was fully licensed by Health Canada and operating legally. The move prompted the company to take its banking needs to Alterna Savings.
Some owners of ancillary businesses that do not directly sell cannabis, such as head shops or glassmakers, have also had trouble with the banking sector, Lewin said.
He called the move “mean spirited,” arguing that many in the illegal cannabis market want to participate in the economy and be upstanding citizens. He said some unlicensed dispensaries collect and pay taxes, and many employees who work at them have bank accounts to deposit pay cheques in.
Emery said she hoped to continue banking with RBC, particularly because she perceives her criminal convictions as a necessary part of her pro-dispensary activism. “It would be great to have the bank be brave and say this was forward-thinking,” said Emery. She said that instead, she found another bank willing to take her on as a customer. She declined to say which one.
It’s usually not worth fighting the banks on, Lewin said, because they are privately-owned businesses. “I think it would be an uphill battle to try to force a bank [to work with you].”