Curaleaf's Regional Pres For Northeast Talks About Cannabis Industry Challenges

Speaking at an event hosted by the Hartford Business Journal in Farmington this week, Patrik Jonsson, Curaleaf's regional president for the Northeast

talked about the challenges facing the cannabis industry, including the already well-known lack of banking access for cannabis businesses.

"When we first started [in Massachussetts], we got an account with Bank of America, it took us probably about two months, and that account got shut down, and they held our money for quite a while," Jonsson said.

Regardless of the fact that many states now have some form of legalized cannabis, its status under the Controlled Substances Act means marijuana businesses cannot deduct standard business expenses as stated under Section 280E of the Act. 

Last September, the House of Representatives passed an amendment that would allow banks to do business with cannabis companies without being penalized by federal regulators. This was the fifth time in recent years that the House has passed cannabis banking reform.

The measure, approved by a voice vote making it part of a large-scale defense spending bill. Senate Majority Leader Chuck Schumer (D-NY), has insisted on passing comprehensive justice-focused marijuana legalization first, arguing that passing the Secure and Fair Enforcement (SAFE) Banking Act first could affect support for broader reform.

Jonsson moved from banking to real estate, saying that it could also be a difficult process. He noted that some landlords with bank mortgages are restricted from leasing to companies that make or sell what is still deemed to be a 'federally illegal drug,' while some municipalities ban or set a moratorium on the industry.

Referring to Connecticut in particular, Jonsson advised that prospective businesses wait for some aspects of the market to mature before laying down roots.

Last month NJ.com interviewed Jonsson about the possibility of supplying cannabis in the Garden State, where adult-use it was legalized in November 2020.

Jonsson said Curaleaf only needs about 25 to 35% of its current grow sites to supply the medical market while other alternative treatment centers are in similar positions. However, alternative treatment centers must pay as much as $1 million to convert their licenses so they can serve both patients and the public.

Again, regulations and the cost of entry are keeping smaller businesses from participating in the sector. 

Pablo Zuanic, analyst from Cantor Fitzgerald, highlighted that fact in the context of smaller cannabis operators being at risk of ending up handicapped by regulatory landscape-related issues, such as capital market access, high borrowing costs and restrictive licensing systems.