Brattleboro Savings & Loan to Close All Cannabis Banking Accounts

Brattleboro Savings & Loan. Courtesy Photo
Ella Guinan 1 Mar 2023

BRATTLEBORO — Brattleboro Savings & Loan announced today that it is “withdrawing from offering banking services to Vermont’s cannabis industry.”

With cannabis still illegal at the federal level, banking with cannabis establishments comes with inherent risks for federally-funded banks. Despite interest from the U.S. banking industry, working with cannabis could result in fines or seizure of property that banks hold as collateral.

Only 360 banks and credit unions in the U.S. work with cannabis-related businesses as of 2018.

Last summer, former Brattleboro Savings & Loan (BS&L) president and CEO Dan Yates told VTDigger that BS&L would like to be the “go-to” banking institution for cannabis businesses south of Route 4.

The thought behind this sentiment remains true for BS&L, the company said in a press release today, but that the costs of banking with cannabis businesses far outweighed the benefits for both the bank and its cannabis clients.

According to BS&L’s Executive VP and COO/CFO Tom Martyn, the decision is two-fold and primarily rooted in federal regulation issues. In order to comply with regulations, the bank would need to purchase expensive monitoring software that would in turn place “exorbitant fees [on] our customers that would not be sustainable or fair to them.”

BS&L understands that state regulators have been working to create a “homegrown industry” and don’t want multi-state operators (MSOs) wiping out locally owned businesses, Martyn told Heady Vermont in a phone interview earlier today.

The monitoring standards required for each cannabis client do not differ greatly between operational size, meaning businesses of any size and scope would be liable for roughly the same fees — a reality that does not bode well for small businesses.

In order to comply with regulations, the bank would need to purchase expensive monitoring software that would in turn place “exorbitant fees [on] our customers that would not be sustainable or fair to them.”

“Scaling up” this monitoring system to adjust for these disparities is not within the bank’s capacity at this time, he said. The press release also directly cited VTDigger’s report on alleged ties between Curaleaf-owned Vermont retailers and Russian oligarch Roman Abramovich, citing liability and risk concerns.

“A bank that is even unknowingly involved in providing banking services to a sanctioned person or entity is exposed to substantial liability and risk,” the release said.

This isn’t the first time Vermont cannabis licensees have faced sudden banking hurdles. In August 2022, the Vermont State Employees Credit Union, or VSECU, announced it was placing a temporary pause on new cannabis activity “due to a large and sudden spike in cannabis accounts.”

Due to the instability of cannabis-related banking, many cannabis business owners have chosen to operate with cash only, leaving them at a greater safety risk.

In 2018, Yates cited risks associated with cash-only businesses as a leading reason for why he’d like to see a change in federal cannabis law. “Without access to depository services, it’s purely a cash business and then there’s a risk of armed robbery,” he told the Brattleboro Reformer in 2018.

BS&L has fewer than 10 cannabis banking clients, with another nine or 10 accounts that were awaiting application approval during the bank’s decision-making process. All accounts will be refunded their application fees and will be given 90 days to make new banking arrangements.

According to the Vermont Cannabis Control Board, New England Federal Credit Union and Vermont Federal Credit Union, and Vermont State Employees Credit Union are offering cannabis banking programs at this time. Some out of state banking institutions, like Dama Financial, service Vermont cannabis businesses as well.

See the Brattleboro Savings & Loan press release in full.


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