Two of Canada’s big banks, Scotiabank and the Royal Bank of Canada, are no longer providing accounts to marijuana businesses, even though federal legalization is on the horizon, according to a report from the Canadian Press.
Although both banks declined to discuss the specifics of recent denials of service letters sent to customers operating in the cannabis sector, representatives from both banks indicated the refusals are “risk management” decisions.
“We consider our stringent risk management practices a key strength of our business,” Rick Roth, spokesman for Scotiabank said in the report. “This is why the bank has taken the decision to close existing small business accounts and to prohibit the opening of new accounts for customers classified as ‘marijuana-related business.’”
AJ Goodman, spokesman for Royal Bank, said the decisions to exclude businesses “are not taken lightly” and “only done after a careful assessment,” noting that, as policy, the institution does not provide banking services to companies “engaged in the production and distribution of marijuana.”
“We confirm that as part of our normal business practices, the bank periodically reviews the client relationships we have against several factors used to balance the benefits and risks associated with providing them with banking services,” he said.
Brian Linton, CEO of Canopy Growth Corp., whose brands include Tweed, indicated that their accounts were shut down by Royal Bank last year along with some other licensed producers. He said the decision was likely due to “someone in risk analysis” determining marijuana “had uncertainty surrounding it.”
Canopy now banks with Alterna Savings credit union.