Marijuana has been legal in Oregon since 2015, but that doesn’t mean it’s been fully accepted into mainstream society.
Trevor Griesmeyer, the manager of Beaver Bowls Cannabis House, found that out this summer, when he filled out a membership application for the dispensary with the Corvallis Chamber of Commerce.
Joining the chamber seemed like a logical next step for the three-year-old business, which was looking to raise its profile around town.
“We’re limited in how we can advertise,” he pointed out. “We can’t sponsor a kids’ basketball team, for instance. But we were looking for ways to give back to the community.”
The initial response was encouraging, but tempered with pragmatism: Chamber President Cooper Whitman wrote in an email that Beaver Bowls was the first marijuana-related business to ask about membership, and he wasn’t sure how the board would react.
“You are certainly welcome to apply,” Whitman wrote, “which would force the board to make a decision on all potential members of your business type.”
Griesmeyer submitted Beaver Bowls’ application in June. In August, after two meetings of the chamber directors, he got his answer in another email from Whitman: The board had voted to amend the organization’s bylaws “to clarify implied policy that members of the Corvallis Chamber must abide by local, state and federal laws.”
Even though both medicinal and recreational marijuana are now legal in Oregon and a number of other states, the weed is still classified as a dangerous drug by the federal government.
“Unfortunately,” Whitman wrote, “this means that we can’t accept Beaver Bowls as a member.”
The news came as a disappointment.
“I kind of had a dream of a Chamber Greeters event, where we would have people in here to have doughnuts and coffee and just see what this world is like,” Griesmeyer said.
“I guess it’s just the remaining stigma this industry still has.”
No easy answers
Whitman said the chamber board’s decision was not driven by any sort of anti-marijuana sentiment. Rather, he said, there were concerns that the organization could be held legally liable for violating federal marijuana laws.
“This is all a very gray area because of federal policy,” he told the newspaper.
“If we were to allow businesses as part of the chamber that are not legal according to the federal government, that could open the chamber to legal action.”
Perhaps more to the point, the banks that the organization works with were worried about potential violations of federal money-laundering laws. Some even said they might be forced to sever their business relationship with the chamber if it allowed the cannabis retailer to join.
“The board felt it was the right decision to make,” Whitman said.
“As soon as the federal government changes its policies (regarding marijuana), we’re all for it,” he added. “But we need to have our members be legally operating in every sense.”
The recreational use of marijuana is now legal in nine states, and 31 allow the use of cannabis for medicinal purposes. But as more and more states have reduced or eliminated legal prohibitions on weed, the federal government has gone back and forth on the issue.
Under the Obama administration, Deputy Attorney General James M. Cole sent a memorandum to United States attorneys around the country that essentially directed them to stop prosecuting most federal marijuana offenses in states that had legalized cannabis.
In January of this year, however, that policy officially changed when U.S. Attorney General Jeff Sessions, a Trump appointee, rescinded the Cole memo.
While that has not led to a surge in federal cannabis prosecutions in Oregon, it certainly has done nothing to ease concerns by financial institutions that they could get into trouble for handling marijuana money.
Banks that do business with legal marijuana-related companies risk running afoul of a number of federal statutes, particularly the Bank Secrecy Act. That law requires banks to file a “suspicious activity report” — also known as an SAR — on any transaction that may involve proceeds from illegal activity or that could be construed as money laundering.
Guidance issued by the Treasury Department’s Financial Crimes Enforcement Network (or FinCEN) shortly after the Cole memo states that it is possible to provide banking services to the cannabis industry in states where the drug has been legalized, but only if the reporting rules are followed to the letter.
“Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity,” the seven-page document states.
“Therefore, a financial institution is required to file an SAR on activity involving a marijuana-related business (including those duly licensed under state law), in accordance with this guidance and FinCEN’s suspicious activity reporting requirements and related thresholds.”
A problem for banks
As of March, FinCEN data showed there were 411 banks and credit unions around the country that were working with marijuana-based businesses.
But most financial institutions in this state are still reluctant to do so, according to Linda Navarro, president and CEO of the Oregon Bankers Association.
“One can’t really fault a bank or credit union for taking a conservative approach, because they have to protect all their customers,” she said.
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“It’s a real shame, because this issue has caused a great deal of disruption in the marketplace.”
Beaver Bowls has be able to set up accounts with a Salem-based credit union, but that option is not available in some parts of the state. Cannabis companies without access to banking services are forced to operate on a cash basis, which raises security concerns, keeps customers from using debit or credit cards and causes other headaches.
Navarro’s organization has come out strongly in favor of providing banking services to the state’s legal cannabis industry — but only if federal law is changed to ease the regulatory burden on its members.
Several attempts have been made to do just that, including legislative acts sponsored by various members of Oregon’s congressional delegation, but so far none has passed.
“At the end of the day, we want the problem solved,” Navarro said. “We want Congress to pass legislation that would pave the way for banking services (for the cannabis industry).”
Meanwhile, the industry continues to grow in spite of the challenges it faces.
According to New Frontier Data, which tracks the marijuana business, there are currently 2,065 recreational cannabis companies licensed to operate by the state of Oregon, including roughly 1,100 producers, 200 processors and 600 retailers.
Those companies employ as many as 20,000 Oregonians, the firm estimates, and those businesses are expected to generate about $750 million in sales this year — a number that New Frontier believes will top $1 billion annually by 2025.
And since marijuana became legal in Oregon, it has generated just under $200 million in tax revenue for the state.
With all that going for it, weed could be a key part of the state’s economic growth strategy, supporters believe, but legal and regulatory issues are holding it back.
“Oregon is poised to be America’s breadbasket for cannabis,” said Jesse Bontecou, deputy director of the Oregon Retailers of Cannabis Association, a trade group with more than 300 members.
“It should be our state’s next multibillion-dollar industry, but the current business environment and regulations are strangling our local industry severely, weakening its ability to compete nationally when full legalization does happen.”
Lingering social stigma also remains a problem, Bontecou said.
“Oregon’s cannabis businesses and workers are unquestionably still subjected to bias, fear and a multitude of irrational and toxic policies from both non-cannabis businesses and government regulators,” he said.
“This makes it extremely hard for cannabis businesses and workers to flourish and fully participate in their local communities and economies.”
Difference of opinion
To be sure, those attitudes are starting to change. Despite their longstanding ties to the business establishment, some chambers of commerce around the state have begun to admit marijuana-based ventures into their ranks.
“At the Newport Chamber of Commerce, any legitimate business operating in our area that wishes to join the chamber may,” said interim director Patti Ferry.
And the Salem Area Chamber of Commerce is hosting a presentation next spring by a company that makes edible marijuana products.
“Our membership is very interested in the topic of marijuana,” said Kate Gillem, the Salem chamber’s public relations director. “Since it became legal, it has become a large revenue generator.”
Here in the mid-valley, however, that shift hasn’t happened yet. Both the Albany and Lebanon chambers of commerce changed their bylaws several years ago to bar any business that doesn’t follow all local, state and federal laws.
Like Whitman, the leaders of both organizations say it’s nothing personal – they’re just trying to stay on the right side of the law, not looking for ways to hold marijuana businesses at bay.
“If the federal law would change, then that would allow them to join,” said the Albany chamber’s Janet Steele.
To the people on the receiving end, however, that kind of rejection can seem very personal indeed.
For Beaver Bowls co-owner Angie Weeks, the Corvallis chamber’s decision felt like a slap in the face.
“I feel discriminated against,” she said.
“I grew up in this town. I’m a member of this community. My kids go to school in Corvallis. I feel like they’ve changed their bylaws purposely to exclude us.”
Griesmeyer feels the sting as well, so much so that he now wonders why he was so eager to join the Chamber of Commerce in the first place.
“I’ve been asked that,” he said. “‘Why do you want to be a member of an organization that doesn’t want you as a member?’ And I have to rethink that.”