METRO Bank, one of the few institutions in the UK open to working with cannabis-related companies, is now closing its doors to the sector.
The bank, which became the first high street bank in over 100 years to open in the UK in 2010, has reportedly informed business accounts holders tied to the CBD industry that it will be closing their accounts.
According to sources speaking to BusinessCann, Metro Bank is closing ‘every account that’s in any way connected to the CBD sector’, and will cease providing any account holders with banking services moving forward.
Furthermore, according to a letter sent to one cannabis-related business, Metro Bank reportedly says it will respond to any requests for a status report on closed accounts with ‘no comment’.
Bank Refuses To Comment
Letters are understood to have been sent to account holders in the last half of December, informing them that the closures were due to happen within a week.
Metro Bank told BusinessCann that it did not want to comment publicly on the issue, but referred to its terms and conditions for business current account holders.
These state that Metro Bank withholds the right to ‘suspend, stop or reduce a service, facility or account’ to any account holders who breach its guidelines.
According to the document, Metro Bank can suspend, withdraw or restrict services if it has ‘reasonable grounds to suspect unauthorised or fraudulent activity’, if a ‘court or authority tells us to act in that way’ or if ‘you are not eligible (or no longer eligible) for an account, service or facility’.
BusinessCann is unclear which of these guidelines Metro Bank has cited as a reason for the recent closures, or why these were not flagged as issues when the companies first set up their accounts.
An Ongoing Issue
Cannabis-related companies throughout the UK have struggled for years to establish business bank accounts at major institutions, with banks, regulators and underwriters often choosing to steer clear of an industry they perceive as risky.
Metro Bank was considered one of the few financial institutions open to working with cannabis-related companies, and its recent move will provide a major blow to the industry as it continues its battle to legitimise itself.
It is also far from the only bank to have closed accounts for businesses operating in the cannabis sector.
UK firms Revolut and Wise, both of which refer to themselves as ‘financial technology companies’ rather than banks, are also understood to have closed a number of accounts of businesses related to the cannabis industry.
In 2018 Revolut closed the account of a well-known, non-plant touching, UK ancillary business.
Revolut informed the company that its services were now being denied and that its account was being offboarded.
When asked to clarify why the account was being offboarded, an analyst from Revolut said simply that the ‘nature of your business did not comply with our policy at the time’.
This abrupt closure, which like Metro Bank allowed the company a week to remove funds from their accounts and cancel any incoming payments, led to significant financial issues which took over a month to resolve.
No Cannabis Here!
Although BusinessCann is aware of at least two cannabis-related companies that have held accounts with Revolut in the past, it said it does not and never has dealt with cannabis-related companies.
In a statement sent to BusinessCann, Revolut said it does ‘not accept these types of businesses as customers’, adding that it has ‘always had this policy’ citing a list of companies it refuses to deal with including ‘Cannabinoids (THC, CBD, CBN)’, alongside ‘dating escort service’ and ‘armaments, nuclear, weapons or defence manufacturers’.
In similar fashion payment processing giant Stripe recently informed a UK cannabis company that despite holding an account with them for some time, and processing a significant number of payments, it would ‘turn away your business’ as it was ‘unable to accept payments for cannabis-related businesses’.
Stephen Murphy CEO and co-founder at UK canna-tech, media and conference business Prohibition Partners, says these developments highlight the inconsistency experienced by the legal cannabis industry when dealing with banks and other financial service providers.
“They’re not consistent in their treatment of the legal cannabis industry. They won’t shut down an institutional business like a law firm that works in cannabis and receives money directly from the legal cannabis industry, even though the same money goes through both companies.
“Often their own internal policies are so vague, they don’t really know where to sit?”
He added: “I think banks are still trying to understand the industry, there’s still this lack of clarity of their treatment of cannabis, and understanding of the legal position towards cannabis.”
@BusinessCann will be delving further into the tricky issue for European cannabis businesses over the coming weeks