Assembly hearing seeks “solutions” to cannabis banking “challenges.”
The New York Assembly Standing Committee on Banks held a first-of-its-kind (in the state) hearing on Thursday that aimed “to examine how to establish a legal framework in providing banking services to cannabis businesses in New York State.”
The fact that it fell on the same day as the Senate Banking Committee hearing on SAFE Banking was a coincidence, but nonetheless points to the breadth of attention that is directed toward solving the problem.
Pamela Hunter, Chair of the Assembly’s Committee on Banks, noted what was happening in D.C. at the start of the hearing.
“Some of you may know that today the U.S. Senate currently is holding a hearing on this very same issue. So we’re talking about it now and so is the federal government. So hopefully we’ll be able to walk away from here today with some solutions to help our small businesses in this new business in the state grow,” she said.
Harry Bronson, Chair of the Assembly’s Committee on Economic Development, Job Creation, Commerce and Industry, who co-led the meeting with Hunter, also spoke at the start of the hearing, with a focus on what is — or, more aptly, isn’t — happening at the federal level.
“We’re trying to launch a new industry here. And so we really can’t wait for the federal government to act, especially given the deadlock that happens at the federal government level so often,” he said.
Several other Assembly members participated, including Majority Leader Crystal Peoples-Stokes, Brian Curran, Khaleel Anderson, Grace Lee, and Alicia Hyndman, to name a few.
The day’s agenda included more than a dozen speakers, and Jim Rogers, Director of Business Development for the Office of Cannabis Management, went first.
Rogers said that his team has spent “12 to 14 months in regular conversation with banks and credit unions” to encourage them to work with the cannabis industry, and that he quickly learned “there’s no lack of enthusiasm.”
He said that in calls with financial institutions, OCM “really put the question to them directly: ‘Are you worried about federal scrutiny? Is that why you won’t do loans? Or are you really just worried about plain old risk in an emerging market with limited collateral for a business? And the answer was really just the second one.”
He continued: “So if that’s true, there are existing state programs and other agencies and authorities where the state has taken on the job of de-risking some higher risk loans. If we can bring some of that programing into the cannabis space and we can encourage commercial loans in year one, two and three, and then they sort of take over from there, we would have achieved something really unique in New York State and we’ll address the capital problem, which is the single biggest problem to emerging equity businesses.”
In response to a question about the banks already doing business with cannabis operators in the state, he said that there are some “notable names” and “giant players.” While he didn’t name names, he did provide one interesting data point, which is that Valley National Bank “has over 500 cannabis related businesses in their portfolio.”
As the questioning of Rogers wrapped up, Hunter noted that she invited the Department of Financial Services to the hearing but “they declined to attend,” and will instead send testimony.
The next speaker was Clare Cusack, President and CEO of the New York Bankers Association.
“I want to start by saying we absolutely applaud the New York State Assembly for bringing forward this discussion on a frustrating and seemingly unanswerable question of how to bank cannabis in New York State. Let me assure you that we are frustrated as well,” she said.
“The good news is that while more steps are needed,” she continued, “there are financial institutions that have found a way to bank the industry within regulatory and legal requirements in good faith.”
Cusak later turned to Peoples-Stokes and her prioritization of equity, and to the state’s prioritization of “justice-involved” applicants, noting that the current hoops that banks have to jump through “could raise red flags for the very people we hope to help in that effort.”
And, later, Cusak returned to this point, and the importance of movement in Congress.
“We’ve been working with Majority Leader Schumer quite a bit, and his support is so important here. We brought up the point, particularly about what we’ve done in New York as a nation leader in terms of social equity. If he really wants that to succeed here in New York, the SAFE Banking Act is going to protect folks who we’re trying to help under that vision,” she said.
The remaining speakers on the agenda included:
• Sean Willett, Senior Vice President & Chief Administrative Officer, Five Star Bank
• Christopher Pajak, Chief Operating Officer, New York Credit Union Association
• Frank Degraw, President & CEO, Sunmark Federal Credit Union
• Nikki Kateman, Political & Communications Director, Local 338 RWDSU/UFCW
• Kimberly Tanami, Founder & CEO, Hemp Productions Inc.
• Ruben Lindo, Founder & CEO, Blak Mar Farms LLC
• Alex Harowicz, Founder, Staack
• Bernard Birnbaum, Co-Founder, Finance, Kind House Brands
• Harvey Newkirk, President, Bulk Bully Consulting
• Paula Collins, Cannabis Tax Attorney, New York Consortium of Cannabis Accountants
• Cristina Buccola, Founder & Chief Counsel, Cristina Buccola Counsel PLLC
Council member sends letter asking cannabis regulators, mayor, AG: do better.
Council member Gail Brewer, perhaps the most publicly outspoken in the City Council about unlicensed cannabis shops, has sent a forceful letter to Chris Alexander, executive director of the Office of Cannabis Management. Many other officials are cc’d, including Attorney General Letitia James, Mayor Eric Adams, and the NYC Sheriff’s Office.
“I believe the response to unlicensed cannabis retail stores has been scattered and siloed. There is insufficient information sharing regarding store locations, landlords, and owners as well as failures to share evidence. I find the city’s response to this public health crisis unsophisticated and OCM’s role in assisting the city unfocused,” Brewer wrote, noting that she understands the difficulty of reacting to new problems when they arise, similar to e-bike batteries, which have started fires.
“The new enforcement legislation provides new tools, but we need a foreperson, and OCM must take on that role,” Brewer wrote, referencing cannabis enforcement legislation that Gov. Kathy Hochul signed last week.
The letter calls on OCM to create a database of unlicensed dispensaries, for example, and asks that regulators create a task force in partnership with the AG’s office to “investigate the supply chain of illegal cannabis products as well as operators who control multiple retail locations.”
NJ Gov. Murphy signs tax relief bill.
This week, Gov. Phil Murphy signed into law A3946/S340 to exempt state-legal cannabis businesses from 280E, an Internal Revenue Service tax code that prevents cannabis businesses from making typical deductions because cannabis is federally illegal.
The bill was authored by Assemblywoman Annette Quijano and Senator Troy Singleton in collaboration with the New Jersey Society of CPAs’ Cannabis Interest Group.
Lawmakers in New York pushed similar legislation last year, as Cannabis Wire reported.
