Oregon’s governor recently vetoed efforts to create a state bank for marijuana companies, in another blow to the struggling industry. The lack of consistent and equitable access to banking is a recurring problem for marijuana businesses in Oregon and other states. Federal reform through the Secure and Fair Enforcement Banking Act (SAFE Act) has been in the Senate for years. Again, the SAFE Act would “allow financial institutions to provide banking services to cannabis businesses, even as marijuana remains illegal federally.” Despite the tidal wave of legalization at the state level, financial institutions remain reluctant to provide banking services to these businesses due to the state-federal legal conflict and these institutions are inherently risk-averse. But it hasn’t gone anywhere and we wonder if it ever will. Probably not.
During this legislature, Oregon considered creating a State Public Banking Task Force in HB 2673. The bill directed the task force to consider and make recommendations on establishing a state public bank. The bill specifically directed the task force to investigate the provision of financial services to cannabis companies. As we previously wrote, “A state-run state bank could be a real boon for Oregon’s licensed cannabis companies.” However, we doubted that Oregon would actually be able to provide marijuana companies with reliable and efficient banking services through a state-run bank.
Unfortunately, Gov. Kotek vetoed the legislation, citing so-called “logistical challenges.” A blurb on the state government’s website reads: “Reason for possible objection: While the governor supports consideration of establishing a state bank, this bill presents several logistical challenges, including directing the Oregon Business Development Department (OBDD), that already…” administers over 80 programs to lead a new task force, establish an RFP process and complete a substantive report within a condensed timeframe.”
While the veto is bad news in the short term, all may not be lost if Gov. Kotek genuinely supports the creation of a state bank. Lawmakers could potentially be able to draft legislation that addresses their concerns at the next session. But that meeting and report is still a long way off in “fiscal years” and is just the first step toward creating a state bank that would serve marijuana companies.
The veto is another blow to Oregon’s ailing marijuana industry. Cannabis companies and their owners face significant difficulties in finding cost-effective financial solutions. This goes far beyond simple debits and credits to a bank account. The lack of government support for providing financial services to the multibillion-dollar marijuana industry is hampering its ability to raise capital, its ability to expand, and — under certain circumstances — even its owners’ ability to obtain financing to buy a home. Even companies indirectly related to the marijuana industry have struggled to maintain banking relationships.
The bill would have required the task force to present findings and recommendations by September 1, 2024. To the extent that Gov. Kotek objected to this “shortened” schedule, her office should have contacted the sponsors of HB 2673 and other lawmakers. She can propose changes to the bill before it is sent to her desk. Once again, the state of Oregon seems uninterested in taking action to support an industry that generates hundreds of millions in tax revenues and supports the livelihoods of many hundreds. A pity.