Banking has always been a thorn in the side of the legal cannabis industry. In general, banks and credit companies will not work with marijuana businesses because of federal prohibition laws. Now, these laws have led to the closure of an Alaskan marijuana testing lab. Fortunately, even with this cannabis testing lab in Alaska shut down due to banking regulations, the state’s marijuana production shouldn’t slow down too much.
Wells Fargo Shutting Down Weed Business
Late last week, Steep Hill Alaska, an Anchorage-based weed testing lab, announced that it was closing. According to The Seattle Times, the company tweeted that it was “suspending cannabis testing operations on March 31.”
Apparently, the closure is the last stage of an ongoing battle between Steep Hill and Wells Fargo. Federal laws are at the root of the problem.
Because cannabis remains illegal at the federal level, Wells Fargo refuses to knowingly do business with anyone in the legal weed industry.
As it turns out, Wells Fargo holds a loan on the building where Steep Hill rented its office space. When the bank learned exactly what Steep Hill did, it threatened to pull the loan from the landlord. This essentially forced the building owner’s hand, and Steep Hill was squeezed out.
“To me, Wells Fargo is the real bad guy here,” Steep Hill CEO Brian Coyle told The Seattle Times. “They could give a [expletive] about Alaska. Only 700,000 people in Alaska; that’s less than the city of San Francisco.”
He added: “We need to hold their feet to the fire. If they’re going to be doing business in Alaska, they should be following Alaska’s state laws.”
Will This Impact Alaska’s Marijuana Industry?
Alaska law requires that all marijuana be tested at a state-approved testing facility. In particular, cannabis must be screened for harmful pesticides or other contaminants. Before closing, Steep Hill was one of only three such testing sites in the state.
In the immediate wake of Steep Hill’s announcement, there was some concern over how the lab’s closure might affect the state’s cannabis industry as a whole. Fortunately for Alaskans, it sounds like it won’t make that big of an impact.
With Steep Hill out of the game, all cannabis sold in Alaska must now be tested at one of the two remaining labs: CannTest and New Frontier Research.
According to The Seattle Times, CannTest alone has enough resources to handle the state’s full cannabis supply.
Final Hit: Cannabis Testing Lab in Alaska Shut Down Due To Banking Regulations
This closure is the latest tension to arise out of the differences between state cannabis laws and federal cannabis laws. In particular, banking has been one of the most pressing points of tension for marijuana business owners.
Along with facing problems like those experienced by Steep Hill, many cannabis businesses are forced to become cash-only operations since banks and credit companies won’t work with them.
This can make otherwise simple business procedures a bit more cumbersome.
Even more pressing, it also creates added security worries, since many shops—especially dispensaries—are forced to deal with relatively large amounts of cash on a regular basis.