Banking Issues Hinder Mass. Medical Marijuana Dispensary Applicants

BOSTON — Some medical marijuana dispensary applicants just disqualified by the state Department of Public Health after initially receiving provisional approval are blaming some of their problems on banking, and the disconnect between federal and state law when it comes to medical marijuana.

John Greene says his rejection after a year of work to open a dispensary came as a shock.

“We weren’t ready for it,” Greene said. “We were completely disappointed and stunned.”

Greene had made progress previously. He submitted applications for three dispensaries in November, and the state notified him in January that he could proceed with plans for one in Cambridge, and reapply for a different location for one of his other dispensaries. In his initial applications, he included bank statements showing he had the required $1.3 million to fund the Greeneway Wellness Foundation’s startup.

But in a letter to Greene on Friday, DPH detailed its concern that he quickly withdrew the funds and returned them to his investors after submitting his applications in November.

Greene says he had no choice.

“Once the initial application went in, it went public,” Greene explained. “The president at the bank just said, ‘Hey, listen, we’re not going to keep your funds in here. This is only temporary.’ So we immediately started looking at other banks.”

In fact, he says, a total of four banks rejected him. Medical marijuana is legal at the state level, but not at the federal level — and banks are federally regulated.

“A lot of banks did not feel comfortable, basically, having oversight over what is viewed as federally illegal,” Greene said. “We’ve always maintained the financial resources necessary. I don’t think we should be punished for federal banking institutions that are just out of our control. We’ve worked hard, we’ve put a lot of passion into it, and we know we want to fight.”

Greene says he gave DPH letters from three of the banks showing he was rejected, and he’s waiting for a letter from the fourth.

And he gave the state letters from his investors showing they were holding the funds as “custodians” for Greeneway. But DPH says those letters were written in early June, and bank statements show “Greeneway did not have the requisite funds ‘in its control and available’ since submission of its applications.”

Greene says he will appeal the DPH decision.

Another dispensary team backs up the banking complaints.

“Every dispensary has had a very difficult time establishing a banking relationship,” said Ernie Corrigan, a spokesman for Brighton Health Advocates. The company was provisionally approved in January to proceed with a dispensary — Compassionate Care Clinics in Fairhaven. But it was among the six teams that found out Friday it now would not be receiving a provisional certificate of registration.

In its letter rejecting the company, DPH says Brighton Health Advocates withdrew $144,000 of the $500,000 in required funds from Rockland Trust after filing its second-round application.

When asked for explanation, the company responded that the bank had “communicated a policy of non-acceptance of companies involved in marijuana for medical use,” according to the DPH letter.

“Investors who are putting in hundreds of thousands of dollars into these accounts — you worry about the prospect that the federal government might decide to seize these funds in federally chartered banks, because they can,” Corrigan said. “That’s an unfair burden to put onto these businesses.”

DPH said Brighton Health refused to provide complete documentation from the bank.

WBUR has requested comment from Rockland Trust on its involvement with both Brighton Health and Greeneway Wellness Foundation.

An even bigger factor in DPH’s rejection of Brighton Health Advocates may have been the company’s plan to divert a large percentage of its revenue to a for-profit arm of the company — thereby, according to DPH, violating the requirement that the dispensary be nonprofit.

“We have probably the lowest overhead, lowest salaries, and the most amount of money going back into the community of any of the applicants. So any suggestion there was an excessive amount of profit being rolled into individual pockets, that’s an issue we could have cleared up,” Corrigan said.

The dispensary planned to donate 35 percent of net revenues to local nonprofits to fight alcohol and drug abuse and school absenteeism, according to Corrigan. It changed its corporate structure in response to the state’s concerns.

The company is still deciding whether to appeal or wait and start fresh when a new round of dispensary applications opens next year.

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  • scientist57

    Instead of setting up unworkable over-regulated near-monopolies which will probably be unable to compete with the black market, the states should at least be trying to anticipate how the market will evolve: freedom of enterprise will inevitably produce a collapse in prices. The only alternative is to increase enforcement of prohibition laws to protect the monopoly market–a policy which has no real future considering the trajectory and speed of political evolution on this issue.

  • Argle_Bargle

    @scientist57:disqus This sounds like misdirection. Dispensaries are and have been successfully operating in other states for years, with occasional disruption by the feds. That the State of Massachusetts has chosen to needlessly confuse and delay the will of the voters, which carries the force of law, incidentally, does not imply the failure of a model that has worked well elsewhere.

    Instead of relying on theory (you sound like a market theologist, frankly, with talk of “over-regulation,” “freedom of enterprise,” and “inevitably”), let’s stick to the facts: it may take the threat of a class-action lawsuit with huge-dollar penalties, or similar legal sledgehammer, to re-focus the state’s priorities. Democracy and accountability are what’s at stake here, not questionable abstractions.

    It’s About Time Dept: What’s noteworthy in this story isn’t the eminent sense made by Mr. Greene, but that an NPR reporter is actually doing her job. Huzzah for that.

    • MikeM

      When I submitted our Phase I application Lynn Jolicoeur was there, at Mass DPH, 250 Washington St, and interviewed me, as well as several other applicants. She wrote an article about us, after Phase II as well. Most reporters are not very good, they just repeat what is in a press release. Lynn is not one of those. If we had more like her, this process, as well as the country, would be a better place.

      Mass DPH has looked for excuses to eliminate groups. I’m not sure why. Their own regulations, and the Phase II application said that you had to prove you had the $500K available two weeks before the submission date. No where did it say how long that $500K had to stay in that account. Mr. Greene was eliminated unfairly.

      Mass DPH did a lot of things well in this process. But there needed to be a bit more of a personal component. Some people lied about community support, they should be gone. But if DPH had spoken to Greene, he could have explained what happened, and they would have enough approved dispensaries to satisfy all counties and the law. Now they do not have enough approved dispensaries to have one in each county.

      • Argle_Bargle

        Yes, Lynn Jolicoeur is to be celebrated because NPR has posted some terrible reporting on MMJ.

        A year ago I could have been charitable toward DPH, but now a fair description of the process is ‘Mary Poppins with a head injury.’ With dispensaries already operating in 20+ other states, Massachusetts tried and failed to re-invent the wheel. Plus, the state absconds with failed application fees (and note that the Greene group posted $1.3 million to account before scattering it to prevent federal intrusion.)

        The process has been outrageous for patients and dispensary applicants, but the silver lining is that the 2016 legalization vote will rocket through.

        • MikeM

          What would you have DPH do differently? For example, some of the 20 provisionally approved were liars. Some regulation of this process probably is required. The Colorado system seems to work pretty well. Cali, not so much.

          • Argle_Bargle

            Let’s shine another light on the question: Why did DPH decide to forego the many successful examples of MMJ operations? Were Massachusetts the first MMJ state, delays might be justified. But we’re 18th of 22 states to do so, with the District of Columbia ahead of us as well. There is no valid excuse.

            My criticism is entirely pragmatic; it’s 18 months after the vote and the system is not yet operating. That’s ample time to complete a task far more complex than dispensary licensing. And apart from the disservice to voters and patients, has anyone estimated how many jobs and state tax payments are MIA because of this policy failure? Do these assertions seem intemperate?

            At any rate, best of luck in your important work, MikeM.

  • Silverado

    The banks have been such great stewards of the public trust….tell me again why we would trust them to do the right thing when it comes to….ANYTHING??? What a joke….the banks find their conscience with cannabis. Oh boy now I can sleep better at night knowing they’re looking out for Joe Sixpack….AGAIN. These banks are SICKENING & pathetic…

  • Al Eajance

    If today’s liberals will callously murder the unborn, who won’t they attack?

  • Pueblo Potter

    Contact http://www.healersbank.com for a marijuana bank account.

  • Linus Upanother

    In truth, we’re beginning to find more and more evidence of global cooling: http://bigstory.ap.org/article/cold-dis-comfort-anarctica-set-record-1358

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