"Anyone who walks into a Huntington [Bank] branch should feel welcomed. … We hold ourselves accountable to the highest ethical standards in how we operate, hire and train colleagues, and interact with the communities we have the privilege of serving." – Statement emailed to CBS MoneyWatch from Huntington Bank on 12/19/18.

Bah Humbug!

Huntington National Bank (HNB) doesn’t discriminate against or mistreat the communities they serve … yeah, right. There’s one distinct group of citizens they don’t want. Those customers risk having their lives turned upside down.

August 17, 2018 seemed like any other summertime Friday. Chores and yard work awaited. The doorbell rang. The mailman handed me a pen to sign a certified letter from Huntington Bank.

Mind you, I was a Huntington Bank customer for 42 years. Wedding checks were deposited into my account as was Social Security. The account paid for kindergarten crayons and college tuition. Never an overdraft or bounced check. By any banking standard, I was a model customer.

So, I could hardly believe my eyes when I read, “We regret to inform you that this deposit account(s) exceeds our risk tolerance and we will be closing these account(s) on August 28, 2018.” All questions would be answered at (866) 922-4310. My fingers hit the key pad.

What accountable Huntington colleague answered? A recording that said to leave a message. The call would be returned the next business day. Only in my case, that was Monday, just days from the death of my debit card, as warned in the letter.

With letter in hand, I headed to my community branch to speak with a human. The banker looked at her screen and saw a perfect account. She checked with the Fraud and Electronic Departments. No issues there. Was this letter for real? Over the weekend, my anxiety grew … Is there life without a debit card?

I called HNB customer service Monday morning. The rep looked at the account. A-OK. I asked for a supervisor. A-OK. I asked for his supervisor. After jumping from department to department, I finally got bad news: This was a “bank-initiated closure” descending from the highest levels of the corporation. Who must I call? (866) 922-4310.

At day’s end, that number finally appeared on my caller ID. An unidentified woman said she wanted to help with transferring my account. Why is that necessary? Can’t say. Why was my account closed? Can’t say. What is your name? Can’t say. Who do you work for? Can’t say. Is it appropriate to discuss private banking with unidentified strangers? I felt stonewalled. Ultimately, she hung up on me.

In one last attempt to decode this Rosetta stone, I emailed the PR firm that assists Huntington’s Director of Customer Advocacy, Carrie Birch, asking them to forward my query: does HNB’s “Welcome One. Welcome All” apply to me?  Two days later, Ms. Birch’s assistant left a message on my answering machine. Who can help? (866) 922-4310.

My quest for accountability took me to my friend, colleague and sometimes counsel, Bob Fitrakis. Walking into our meeting, he handed me two nearly identical letters from HNB, one for the Ohio Rights Group (ORG) and one for the Ohio Rights Group Education Fund. Both accounts were slated for termination on … September 11th aka, 9/11.

Mind you, again, both entities were loyal HNB customers since 2013. The accounts paid for ballot issue petitions, legislative handouts and educational materials that helped physicians and patients better understand an important topic of our time. All activities comprised free speech and complied with respective tax-exempt statuses. Never an overdraft or bounced check. By any banking measure, these organizations were model customers.

Now, a broader picture emerged. If I, fellow officers and the organizations I co-founded each received identical HNB forced closure letters, there must be a connection. And there was.

The law firm Fitrakis/Gadell Newton, LLC in polite legal language asked Huntington to explain itself. Their response is jaw-dropping:

“Huntington National Bank (“HNB”) maintains a policy that prohibits banking customers that hold a license to distribute marijuana in a state (direct marijuana business), and that same policy prohibits HNB from banking customer [sic] who provide support to direct marijuana business (indirect marijuana business). As you may be aware, conduct that is legal on the state level could violate the federal Controlled Substances Act, and as such, due to the Bank’s low to moderate risk profile, it chooses not to provide services to direct or indirect marijuana businesses. Accordingly, the accounts HNB closed included a direct or indirect marijuana business, or signers on same.”

First, let’s be clear. The ORG is a 501(c)(4) advocacy organization that neither applied for, nor holds a marijuana license. Do we provide support? If free speech and advocacy for Ohio’s sick, dying and disabled constitute “support,” then, yes, we proudly do.

But let this sink in. If you hold a cultivator, dispensary, processing or testing license anywhere, Huntington prohibits you from being a customer. If you advocate for medical marijuana or the patients who use it, Huntington will discriminate against you. If your company services this burgeoning industry, expected to exceed $40 billion in economic output by 2021, Huntington will close your account without warning or recourse, well, except (866) 922-4310.

Bank account forced closures may represent the last dying breath of cannabis prohibition. But this unprovoked hostility from financial institutions shows how ingrained this injustice has become. Policies intended to snare money launderers instead injure ordinary citizens, free speech and a new economy. Huntington Bank’s welcoming statements ring hollow.

Since the feds shield banks from transparency even under subpoena (see “The State of Cannabanking”), what recourse do we have? It’s a simple, tried and true. Boycott. Cannabis Community Make Note: Don’t do business with Huntington Bank!

Mary Jane Borden is an artist, author and cannabis advocate from Westerville, Ohio. During her 30-year career in drug policy, she has co-founded and led five cannabis-oriented groups including the Ohio Rights Group and its Education Fund. She has co-authored four proposed constitutional amendments, lobbied for six medical marijuana bills, composed 39 funded grants, written 50 Columbus Free Press articles and testified before the Ohio House and Senate to encourage passage of HB 523, Ohio’s medical cannabis law.

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The State of Cannabanking

There’s a lot of money to be made in cannabis these days. Annual sales of the Ohio Medical Marijuana Control Program are forecasted at $225 million in 2021. By then, total economic output from the legal cannabis U.S. market will have risen to $40 billion and sport 414,000 jobs, encompassing not only growing, harvesting, processing and testing, but also ancillary services like packaging, accounting, security, HVAC and lawn mowing.

One would think that financial institutions would salivate over such numbers. More customers, more transactions, more fees. One would be wrong. Almost daily, the news covers yet another bank slamming its monetary door on cannapeople and cannabusinesses. Wells Fargo closed a Florida candidate’s campaign account during her primary election. In Ohio, Grow Ohio Pharmaceuticals (Level I cultivator), Apex Supercritical (maker of extraction machines) and the Ohio Rights Group (advocacy organization) had their accounts shut down. An estimated 70 percent of marijuana businesses are unable to bank, even though active cannabis licensees in the U.S. number almost 10,000.

This makes no sense until a tangled web of federal banking laws and unintended consequences unravels.

Banks are corporations with a federal (“National” or “N.A.” by their name) or state charter. In Ohio, state banks are regulated by the Ohio Department of Commerce. Insured deposits held by these entities usually involve the federal government.

The U.S. Department of the Treasury regulates banking institutions under Federal Reserve system (“Fed”). The Fed serves as the U.S. central bank. It oversees federal- and state-chartered banks, helps maintain the stability of the financial system and supervises payment systems that insure deposits and clear checks. The Fed is charged with enforcing anti-money laundering laws that prohibit the use of criminal proceeds in financial transactions.

The fundamental problem with cannabis banking begins with the 1970 Controlled Substances Act (CSA) where marijuana resides in highly restricted Schedule I. The CSA prohibits cannabis’ manufacturing, possession and distribution and defines all transactions as money laundering.

Thus, a bank’s decision to work with marijuana-related businesses imposes a heavy regulatory burden. For one, banks adhere to the “Know Your Customer” doctrine and must assess any “illegal intentions for the business relationship.” The U.S. Patriot Act of 2001 mandated “due diligence” in developing those relationships.

Currency Transaction Reports (CTRs), which banks routinely file for currency transactions over $10,000, represent one reporting mechanism that disproportionately targets the cannabis industry. The absence of bank accounts begets large cash transactions that beget CTRs.

U.S. Justice Department memos issued under the Obama administration shielded cannabusinesses from the full force of the feds. They directed U.S. Attorneys to honor state laws provided eight priorities were met. The well-known Cole Memo served as a stop gap until former Attorney General Jeff Sessions rescinded it in January 2018. Reverting enforcement to the whim of disparate U.S. Attorneys induced more risk into the highly risk adverse banking industry. Banks and even credit card processors became increasingly wary of marijuana.

Under federal law, banks must assist government agencies in detecting and preventing money laundering. To comply, these institutions must obtain and review a myriad of information about “at risk” businesses, including “suspicious activity” and specified “red flags” (violations). Each flag must be reported to the Treasury Department’s Financial Crimes Enforcement Division (FinCEN) as a separate “Suspicious Activity Report” (SAR). For cannacustomers, this could mean a report for every single check or deposit, even where marijuana is legal at the state level: medical, recreational or hemp. Neither government agencies, candidates, professionals, advocacy groups, nor even individual citizens are immune.

There are three kinds of Suspicious Activity Reports:

Marijuana Limited Filing. Due diligence finds no red flags/violations.

Marijuana Priority Filing. Due diligence finds one or more red flags. Financial services continue.

Marijuana Termination Filing. Due diligence finds one or more red flags. Financial services terminated because of violations or a corporate decision to can all cannabusinesses.

SARs must be retained five years from the filing date. Worse, SARs aren’t just veiled in secrecy, they hide behind impenetrable walls. “No bank, and no director, officer, employee or agent of a bank that reports a suspicious transaction may notify any person involved in the transaction that the transaction has been reported,” so says FinCEN’s training manual. Incredibly, SARs can’t even be subpoenaed. No ability to correct the incorrect or challenge a falsehood. In truth, every day, zealous banks dig deep into private finances, red flag unsuspecting customers, close accounts on mere suspicion, dislocate affected families and share this information among themselves and no one else, all while generating a mountain of government-mandated paperwork.

The tentacles of federal banking laws enwrap everyone in the cannabis industry: licensees, employees, contractors, patients, advocates, accountants and even the gal mowing the lawn. Remember, banks follow social media. Their “due diligence” permits them to peer into private spaces and terminate financial relationships with neither warning nor recourse. It may sound unfair. It may sound cruel. It may sound un-American. Sadly, it sounds like the state of cannabanking is not a legal industry.

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Forced closure: What you can do about it

So, you received a forced closure notice from your federally chartered bank. What should you do? First, calm down. You’re not alone. But you do have time-sensitive steps to take, so it pays to be both proactive and prepared.

• Call the bank’s customer service number and find out what’s going on. Remember, while needlessly hostile toward marijuana businesses, banks do enforce basic rules concerning overdrafts, cash deposits and fees. If your account is imperfect, resolve those issues first. If your account is perfect, don’t automatically assume you’re at fault. Even the accounts of “indirect marijuana businesses” (accountants, attorneys, HVAC installers and lawn mowers) could be closed.
• Don’t expect a warning. As a preventive measure, maintain two separate bank accounts and two debit cards in case one goes down.
• Force the bank to close your account. Withdraw all but a small amount. Providing there’s no negative balance, a check for residual funds should be mailed you. This gives you standing in court, if it comes to that.
• Redeposit your funds at another institution. Credit Unions have spoken favorably toward cannabanking. They are non-profit and pay dividends on deposits.
• Make sure your corporate documentation is up-to-date. For business accounts, you’ll need copies of the company’s EIN letter from the IRS, tax returns, operating agreements, meeting minutes and resolutions concerning the new account. The banker will probably review the filings of your organizing documents online.
• Exercise free speech. You should be able to freely protest the bank’s actions with letters-to-the-editor, social media posts and, yes, Free Press articles.
• Advocate to change federal law. “Banking Marijuana Requires ‘Act of Congress’” – wise words from the Boulder Weekly. The Controlled Substances Act, the Patriot Act and the Bank Secrecy Act weave together to create this banking nightmare. Only Congress can fix it. This means removing marijuana from the CSA. Once gone, no basis will exist for money laundering, SARs or account closures. Contact your federal officials and ask them to support this legislation:
• Safe and Fair Enforcement (SAFE) Banking Act. Introduced into the US Senate by Senator Jeff Merkley (D-OR) in April 2017.  Would provide a “safe harbor” for banks that offer financial services to cannabusinesses.
• Marijuana Freedom and Opportunity Act. Introduced into the US Senate by Senator Minority Leader Chuck Schumer (D-NY) in June 2018. Would remove cannabis from the CSA.
• Strengthening the Tenth Amendment Through Entrusting States (STATES) Act.  Introduced into US Senate in by Senators Cory Gardner (R-CO) and Elizabeth Warren (D-MA) in June 2018. Would amend the CSA to not apply to those acting in compliance with state law.
• Support state legislation and other means of change. Because banking edicts come from on high – the federal government – there’s only a few things that states can do other than complain, as many states have.
• Lobby the Ohio General Assembly to adopt a resolution similar to New Jersey’s State Resolution No. 104 that urged passage of the SAFE Banking Act.
• Lobby the General Assembly to pass enabling legislation for the 2018 Farm Bill which became law in December 2018. This bill legalized hemp nationally, making it an ordinary agricultural commodity and opening the national banking system to farmers and producers. Even though some states already have hemp pilot programs, Ohio does not. A USDA approved program in the state will enable Ohioans to take full advantage of this new market.
• Close loop payment systems. Under Ohio HB 523, the Department of Commerce can create a payment system similar to prepaid debit or gift cards. Patients deposit money into their accounts and then draw on those balances when buying from dispensaries. HB 494 and SB 254 were introduced but gained little traction.
• CanPay, a Seattle-based company, lets marijuana patients provide a bank account number and routing number and then pay for cannabis as ACH transactions.
• Cryptocurrencies to entirely circumvent the banking system are being developed. Potcoin, SinglePoint, and POSaBIT serve as examples.
• Join together. Banks and the feds need to hear about the hardships imposed by their outdated policies. If a bank forced the closure of your account or the account of your cannabusinesses (direct and indirect), the Ohio Rights Group would like to hear from you. Please email contact@ohiorights.org. Describe your situation and how these policies have affected you. Please include your name and contact information.
• All direct and indirect marijuana businesses, as well as their customers, vendors and supporters, have the right to be treated like every other business. It’s time to unleash the full potential of this new industry. Fairness in banking is key to making this happen.