3 ms·

I wonder how hard it would be for a bank to try to become nationally available by explicitly serving the people (firearms manufacturers, pornographers, and immi

I wonder how hard it would be for a bank to try to become nationally available by explicitly serving the people (firearms manufacturers, pornographers, and immigrants from high-risk countries, among others) who are inappropriately mischaracterized as “high risk” despite having good books.

Melting_Harps 6y ago
> I wonder how hard it would be for a bank to try to become nationally available by explicitly serving the people (firearms manufacturers, pornographers, and immigrants from high-risk countries, among others) who are inappropriately mischaracterized as “high risk” despite having good books. Very. Operation chokepoint essentially blackballed every single one of those Industries, and some credit unions tried to get a Charter from the Federal Reserve, and were essentially 'choked in the crib' when they attempted to. Look up the story of 4 corners credit union, $100ks were wasted trying to appease the regulators to help members of the Cannabis Industry. Some eventually got other banks to participate, but it was still, and likely always will be what I always referred to as 'bank account whack-a-mole' where several accounts are shut down and have 2-3 to serve as backups when they eventually get shutdown. This happened to a local dispensary owner, whose son is actually a Lightening Network developer and was able to route around it. Adoption was less than ideal, but it proved a point that the tech is mature enough to take on financial censorship if/when the will exists.
- microcolonel 6y ago
  For whatever it's worth, the problem with the cannabis industry is that they are still committing federal crimes, there is a legitimate reason for banks to shy away from cannabis manufacturers, processors, and retailers even if they would have an ordinary risk profile under other circumstances. The federal government does not enforce the law sufficiently to motivate its repeal, so we are stuck in limbo, where the mass of individuals are complacent, and they externalize the costs on the suppliers and retailers.
  - Melting_Harps 6y ago
    > For whatever it's worth, the problem with the cannabis industry is that they are still committing federal crimes, I'm well aware of what that entails in a legal sense, I worked in the Industry as both a former Farmer as well as a Fintech Founder; the thing is, Cannabis is a term that encompasses Industrial Hemp as well as MJ and the former is actually 50 State legal as of 2018 with the Farm Bill in the US. And still many Banks refuse to deal with Hemp farmers or producers of its value added products (CBD/CBG/CBN etc...) and still treat it as if its MJ for reasons only known to them as many large retailers like 24 Hour fitness, Sprouts, and even some Safeways and many Gas stations have CBD products on hand. It could be a scale thing, where losing that large of a customer with immense volume is worth it, whereas a small retailer is not and carries too much risk. Also, consider that the legal status still doesn't mean the banking Industry will accept them with open arms, Canada still has the same issues they always had when it came to financial services and banking where MJ has been legalized Nationwide.
nradov 6y ago
Legitimate federally licensed firearms manufacturers have access to the same financial services as any regular business.
- PixyMisa 6y ago
  Explain that to the Obama adminstration, which ran a program called Operation Choke Point, that lumped firearms in with multi-level marketing and payday loans as "high risk" transactions and repeatedly issued informal - sometimes just verbal - guidelines to banks to not handle such transactions.

Melting_Harps 6y ago

> I wonder how hard it would be for a bank to try to become nationally available by explicitly serving the people (firearms manufacturers, pornographers, and immigrants from high-risk countries, among others) who are inappropriately mischaracterized as “high risk” despite having good books. Very. Operation chokepoint essentially blackballed every single one of those Industries, and some credit unions tried to get a Charter from the Federal Reserve, and were essentially 'choked in the crib' when they attempted to. Look up the story of 4 corners credit union, $100ks were wasted trying to appease the regulators to help members of the Cannabis Industry. Some eventually got other banks to participate, but it was still, and likely always will be what I always referred to as 'bank account whack-a-mole' where several accounts are shut down and have 2-3 to serve as backups when they eventually get shutdown. This happened to a local dispensary owner, whose son is actually a Lightening Network developer and was able to route around it. Adoption was less than ideal, but it proved a point that the tech is mature enough to take on financial censorship if/when the will exists.

microcolonel 6y ago
For whatever it's worth, the problem with the cannabis industry is that they are still committing federal crimes, there is a legitimate reason for banks to shy away from cannabis manufacturers, processors, and retailers even if they would have an ordinary risk profile under other circumstances. The federal government does not enforce the law sufficiently to motivate its repeal, so we are stuck in limbo, where the mass of individuals are complacent, and they externalize the costs on the suppliers and retailers.
- Melting_Harps 6y ago
  > For whatever it's worth, the problem with the cannabis industry is that they are still committing federal crimes, I'm well aware of what that entails in a legal sense, I worked in the Industry as both a former Farmer as well as a Fintech Founder; the thing is, Cannabis is a term that encompasses Industrial Hemp as well as MJ and the former is actually 50 State legal as of 2018 with the Farm Bill in the US. And still many Banks refuse to deal with Hemp farmers or producers of its value added products (CBD/CBG/CBN etc...) and still treat it as if its MJ for reasons only known to them as many large retailers like 24 Hour fitness, Sprouts, and even some Safeways and many Gas stations have CBD products on hand. It could be a scale thing, where losing that large of a customer with immense volume is worth it, whereas a small retailer is not and carries too much risk. Also, consider that the legal status still doesn't mean the banking Industry will accept them with open arms, Canada still has the same issues they always had when it came to financial services and banking where MJ has been legalized Nationwide.

nradov 6y ago

Legitimate federally licensed firearms manufacturers have access to the same financial services as any regular business.

PixyMisa 6y ago
Explain that to the Obama adminstration, which ran a program called Operation Choke Point, that lumped firearms in with multi-level marketing and payday loans as "high risk" transactions and repeatedly issued informal - sometimes just verbal - guidelines to banks to not handle such transactions.