Nearly three years after Canada legalized cannabis, many retailers in British Columbia are still struggling to find access to banks' basic financial services. International pressure and decades of stigma surrounding cannabis continue to affect the fledgling industry, forcing store owners to seek their savings to open their small businesses and limiting growth in the sector, industry experts told CBC News. Charles Varabioff, owner of Kingsway Cannabis in Vancouver, says finding a bank to cover his business account was almost impossible. Branch managers would tell you that the cannabis industry is too high at risk, said Varabioff, who also owns a store in Grand Forks, BC.
The Canadian Cannabis Retailers Association (ACCRES) says that 50 of its 52 members in British Columbia have been denied access to traditional banks and have instead turned to savings cooperatives. He said that only two of its members in British Columbia were able to access banking services with a traditional bank, and that was due to their long-standing business relationships with the bank while they were operating in other industries. Via BC, BC Pehota believes there would be more if cannabis retailers could access financial support from banking institutions. And this problem is not limited to British Columbia.
Nationally, 95 percent of the cannabis companies it represents in Canada are affected by this problem, according to Pehota. Many of Canada's national banks also operate internationally. And while the retail sale of cannabis is legal in Canada, it is still illegal in many other countries. Pehota believes that the stigma of the industry, especially as viewed by international markets, has forced many Canadian banks to stay away from the sector.
Some states have legalized the recreational use of cannabis, but most haven't. In addition, he said, Canada is comparatively progressive in its view of the cannabis industry. Many international markets view the industry from a much more conservative perspective. The cannabis retail sector is a fledgling industry with high regulatory oversight.
Schilling believes traditional banks could consider it more work than it's worth. He said the shadow of the ban still hangs over the industry, but he thinks much of the fear is misplaced because the industry is largely populated by small business owners who are providing a service their community wants. CBC News contacted Canada's major domestic banks to better understand the question. In a statement, the Royal Bank of Canada said that, with an evolving global legal landscape for cannabis, RBC continues to evaluate business relationships on a case-by-case basis, taking into account a number of factors to ensure compliance with laws and our internal risk parameters.
CIBC provides a similar answer. Pehota said banks are freezing cannabis retailers and that is placing an excessive burden on the new industry and its small business owners. She says homeowners have to dig deeper into their savings because they can't get credit cards or small business loans to help them launch their windows from banks or credit unions. Varabioff says it's an additional obstacle that many other types of small businesses aren't required to overcome.
Without the backing of a larger bank, retailers who want to expand their brand outside the province could face barriers. Credit unions are often local to a province or even to a specific community. Pehota says it can create logistical difficulties when an institution has no national presence. Overall, he says that the hesitation of domestic banking institutions is a lack of vision, adding that they do not see the potential economic opportunity created by legalization.
