Bankers Help Crush Cannabis Businesses
Since large banks are more or less adjuncts of the federal government that live off the sweat of taxpayers, all the while whining about how tough they have it, who can be surprised that large banks like Wells Fargo have been enthusiastic in their efforts to crush clients who dare do business with legal cannabis merchants? Notes the Denver Post:
The risk made banks, including Wells Fargo, give commercial clients an ultimatum: Drop the marijuana-related tenants of property financed with bank funds, or pay up the entirety of the loan.
“A couple of the bigger banks have a scorched-earth policy, moving immediately to eviction or simply calling the note, with no courtesy to allow them to do anything else,” said Robert Frichtel, a former commercial mortgage broker who is CEO of Advanced Cannabis Solutions in Colorado Springs.
Fortunately, as described in The Post article, smaller sources of capital have moved into the market eager to capitalize on a booming (and legal) industry in Colorado (which I describe here). If the United States had an actual free market economy, huge mismanaged dinosaurs like the big banks would have been liquidated years ago, or at least significantly shrunk in size. Instead, they went to the public trough and stole a couple trillion dollars from the taxpayers. Naturally then, they show no signs of life when it comes to the sort of entrepreneurship necessary to deal with a renewed cannabis industry that, unlike the banking sector, actually strives to provide good service to customers.
Mind you, I understand that the banks are fearful because they are subject to so much federal regulation, and could easily have their charters revoked if they did not play ball. As with so many industries, the feds have the banks over a barrel. But this relationship is made worse by the fact that the fiscal health of banks is reliant not on their customers, but on the cozy cronyism that keeps government favors coming their way. Banks have no interest in pushing back even the slightest bit in the continued regulatory war on drugs through the banking sector because the banks would rather just take money from their customers by force (via the treasury) than have to earn it.