Chase Debanked My Cannabis Media Company. LinkedIn Forced a Second Look

Outside of my day job, I’m the co-founder and editor-in-chief of Cultivated Media, a media company serving professionals in the legal cannabis industry.

It’s important to note we cover cannabis like any other publication. We have a newsletter, we publish stories, we host live interviews on YouTube and LinkedIn, but we don’t grow or sell any cannabis products.

Last month, Chase abruptly shut down our bank account, only to later reverse course after a LinkedIn post and a lot of back-and-forth.

I’m sharing this story as a window into just how insane it is to run any business with a whiff of legal cannabis, well over a decade after Colorado and Washington first legalized sales.

To understand why this happened, you need a little background into why cannabis banking is such a mess. And in an ironic twist, Acting Attorney General Todd Blanche this week ordered medical cannabis reclassified from the most restrictive Schedule I to the far less restrictive Schedule III, with a DEA hearing set for June to consider consumer cannabis as well, just about a week after the story I detail below went down.

But until those changes go through, the federal government still considers the vast majority of cannabis sales as a Schedule I drug with a high potential for abuse.

In practice, that means any federally chartered bank faces significant legal exposure if it chooses to take cannabis-related deposits or extend loans and lines of credit to cannabis businesses, regardless of whether they’re legal in the state in which they operate.

That means legal cannabis businesses are often frozen out of the broader American financial system, forcing customers to pay in cash, and in turn, forcing businesses to pay their tax bill in cash which creates tons of complications. Many local credit unions will work with cannabis businesses, but the big banks, like Chase, mostly won’t. It’s a risk-reward calculus that each financial institution makes.

Even worse, any company that’s remotely cannabis-adjacent, like ours, is at risk of being de-banked. That means lawyers who help cannabis firms navigate regulatory complexity, accounting firms who audit them, and yes, even journalists who cover them are often swept up. Bank algorithms don’t distinguish. If a business has any association with the industry, it’s at risk.

Congress has tried to fix this untenable situation to no avail. The SAFE Banking Act, a bill that would protect banks that work with cannabis businesses in legal states, passed the House multiple times, though it is yet to receive a full hearing in the Senate. So the federal government is aware of the problem: Cannabis is legal in 24 states and more than half of Americans are able to buy it legally. But the vast majority of banks still won’t engage with the industry, leaving small businesses caught in a political standstill.

We were customers of Chase’s business banking unit for nearly three years.

While we’re certainly not a unicorn, we’re good customers. We pay our credit card bill on time (which maybe makes us less-than-optimal customers, I guess), and we use our account to receive invoices, pay contract writers, and the monthly software subscription fees that keep our little business humming. Cash flows in and out of our account on a regular basis, it’s not sitting there inertly.

So I returned from a 9-day trip to Chile with my family on a red-eye flight last week, obviously pretty tired. I got a text message from Chase while still sitting on the tarmac, saying that I needed to call right away because my account was at risk of being shut down.

I got off the plane and reached a customer service representative in India after a quick hold. They told me our account was deemed “out of scope” of Chase’s business, and the account would be shut down. They said I’ll receive a check to my mailing address with the full balance in the checking account.

I pleaded my case, but the person couldn’t answer why the account was being shut down. I asked her if there was any other information they could provide, but they said this is all they had and the decision is final. No recourse. The supervisor I then reached had no further useful information.

We were at risk of going dark. If we didn’t solve the problem quickly, our website would be shut down. It also meant I had to reach out to our writers and tell them I couldn’t pay them on time. And if there’s one north star in how I run my business as a journalist, it’s paying writers on time. That sucked. And the cherry on top?

When I got home, I went to my local bodega to get a sandwich and a coffee, and my personal Chase card didn’t work. This was later revealed to be a mistake, and was quickly corrected, but I was caught in some algorithmic dragnet that didn’t like what our business was doing.

The next morning, I called again to see if anything had changed. I was again told that our account was “out of scope” of Chase’s business. The person told me this time that it’s written into the fine print that Chase can review your account at any time and close it without recourse.

I was pretty annoyed at that point, so I took to social media to vent. I wrote a similar post across my roughly 20,000 followers on Twitter/X and LinkedIn, describing our de-banking situation and asking for help.

Later that day, I got a missed call from Chase’s Executive Office in Houston. When I called back, they told me my account was now under review and not closed. At that point, fed up with the situation, we had already decided to work with Safe Harbor Financial, which is designed to help cannabis businesses sort out these challenges, and move away from Chase. We ended up with Partner Colorado Credit Union, which is much friendlier to the industry.

I told the representative I would’ve been happy to remain a Chase customer, but we can’t have our business at risk of being disrupted like this. If this happened once, I assumed it would happen again. She told me she understood. I have to say, the Executive Office was far more professional than the regular call center. Out of journalistic curiosity, I asked if she could review the files to see exactly what shut the account down and why. She agreed to do it, and said I’d receive a call back.

The next morning, I received a call from her colleague in the Executive Office. This person said my account fell under a review, and was immediately frozen. But get this: after a secondary review, the bank unfroze the credit cards and said my business checking account could remain open.

So I asked, what triggered the secondary review?

They said that a “social media” post of mine on LinkedIn was brought to the bank’s attention. That’s what triggered the call from the Executive Office, as well as the official second review.

I told the person that I appreciated their time and help. But the fact that it was my LinkedIn post, which got around 90 likes and 50+ comments, that forced a human to consider the issue seems a little bit unfair to the hundreds of cannabis businesses across the U.S. that don’t have the same platform I do.

Chase did not reply to an emailed request for comment.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we’ll show you why it’s our #1 pick. Tap here.

Chase clearly didn’t want to create trouble with a journalist, which is as rational as it is unfair for everyone else.

Obviously, we’re also not a huge moneymaker for the bank, so for them, it’s better to lose the business and be safe, than to take the risk. Every bank has its own risk calculus and banking small cannabis businesses is clearly below Chase’s. That’s not to castigate Chase for their decision.

But that two-tiered dynamic, where institutional accountability only kicks in if you have enough of a public platform to create reputational risk, isn’t unique to banking. But it’s particularly stark here, because the underlying problem is one Congress could actually fix. The SAFE Banking Act isn’t a controversial piece of legislation on the merits. It has broad bipartisan support in the House: Minority Leader Hakeem Jeffries recently confirmed the entire Democratic Caucus supports cannabis reform.

What it doesn’t have is enough Senate champions willing to put their name on anything with “cannabis” in the title, regardless of which party is in power.

While we’re back on our feet, I hope by sharing this story it’ll help wake up some lawmakers who claim to support entrepreneurship and job creation, but won’t touch cannabis with a ten-foot pole. Here’s a concrete example of where Congress can actually help small businesses — by passing banking legislation like the SAFE Banking Act.

At some point “we support small business” has to mean something.

• Safe Harbor Financial (SHFS) — This company directly benefits as it specializes in providing banking solutions for cannabis businesses, attracting clients like Cultivated Media who are de-banked by larger institutions.

• Partner Colorado Credit Union — This credit union benefits from increased business as cannabis-related entities seek out financial institutions “friendlier to the industry” after being rejected by large banks.

• Specialized Financial Services for Cannabis — This industry benefits from the current federal banking restrictions, as it creates a niche market for institutions willing to navigate the complexities of serving cannabis businesses.

• JPMorgan Chase & Co. (JPM) — While facing reputational risk from the incident, the bank’s actions are consistent with its risk calculus to avoid federal legal exposure related to Schedule I substances, maintaining its current operational stance.

• Hydrofarm Holdings Group (HYFM) — As an ancillary supplier to the cannabis industry, its direct banking operations are less impacted, but its growth is indirectly tied to the overall health and expansion of the cannabis market.

• GrowGeneration Corp (GRWG) — Similar to Hydrofarm, this company provides supplies to cannabis growers, and while not directly affected by cannabis banking issues, its business performance is linked to the broader industry’s stability and growth.

• General Media Industry — The incident highlights a specific challenge for a niche media company, but does not broadly impact the financial operations or regulatory environment of the wider media industry.

• Legal Services — While lawyers serving cannabis firms face de-banking risks, the overall legal services industry is vast, and this specific issue represents a niche challenge rather than a systemic impact.

• United States — The federal-state conflict creates economic friction and lost tax revenue opportunities, but the overall U.S. economy is large enough for this issue to have a neutral aggregate impact, though significant for specific states and industries.

• Curaleaf Holdings (CURA) — As a major multi-state operator in the legal cannabis industry, this company faces significant operational challenges, higher costs, and limited access to capital due to federal banking restrictions.

• Green Thumb Industries (GTBIF) — This large cannabis producer and retailer is negatively impacted by the inability to access mainstream banking services, leading to cash-heavy operations and increased security risks.

• Trulieve Cannabis Corp (TRUL) — This company, like other cannabis MSOs, suffers from restricted financial services, hindering its ability to scale, manage finances efficiently, and attract traditional institutional investment.

• Cresco Labs (CRLBF) — Operating in the legal cannabis market, this company experiences higher compliance costs and operational inefficiencies due to the lack of federal banking clarity and access.

• Verano Holdings (VRNOF) — As a prominent cannabis company, it is negatively affected by the federal prohibition on cannabis, which limits its banking options and complicates financial transactions.

• Bank of America (BAC) — This large federally chartered bank, along with others, is negatively impacted by the federal prohibition as it prevents them from serving a growing legal industry, missing out on potential revenue and market share.

• Wells Fargo (WFC) — Similar to other major banks, Wells Fargo is constrained by federal regulations, preventing it from engaging with cannabis businesses and thus foregoing a potentially lucrative market segment.

• Legal Cannabis Industry — This industry faces severe operational hurdles, increased costs, and limited growth potential due to the inability to access mainstream banking, loans, and credit.

• Cannabis-Adjacent Businesses — Companies providing services to the cannabis industry, such as legal, accounting, and media firms, are at risk of de-banking, leading to operational instability and increased compliance burdens.

• Federally Chartered Banking Industry — This industry as a whole is negatively impacted by the regulatory uncertainty, forcing them to either avoid a growing market or face significant legal exposure.

• Short-term Increased Advocacy for SAFE Banking Act — The public nature of Cultivated Media’s de-banking incident, especially involving a journalist, will likely reignite calls and media attention for the passage of the SAFE Banking Act in Congress. Confidence: High.

• Medium-term Continued Growth of Niche Cannabis Financial Services — As long as federal prohibition persists, specialized financial institutions like Safe Harbor Financial and credit unions will continue to see increased demand and market share from cannabis businesses. Confidence: High.

• Long-term Operational Inefficiencies for Cannabis MSOs — Major cannabis multi-state operators will continue to incur higher operational costs, security risks, and limited access to capital due to cash-heavy operations and restricted banking options. Confidence: High.

• Medium-term Reputational Risk for Large Banks — Incidents like Chase’s de-banking, when publicized, create negative public perception for large federally chartered banks, potentially pushing some customers towards more ethically aligned or specialized financial institutions. Confidence: Medium.

• Long-term Hindrance to Federal Tax Revenue Collection — The cash-intensive nature of the cannabis industry due to banking restrictions complicates tax collection for federal and state governments, potentially leading to under-reporting or increased administrative burden. Confidence: High.

• → [Cannabis Industry Investment] — Investment in the legal cannabis industry will remain constrained by banking issues, limiting access to traditional capital markets and keeping valuations suppressed compared to other industries.

• ↑ [Operational Costs for Cannabis Businesses] — The necessity of cash-heavy operations, increased security, and specialized financial services will continue to drive up the operational expenses for cannabis companies.

• → [Bank Profitability (Large Federally Chartered)] — Large banks will continue to forgo potential revenue from the cannabis industry, maintaining their current profitability levels without this new market segment.

• ↑ [Credit Union Deposits] — Local credit unions willing to serve the cannabis industry will likely see an increase in deposits and business accounts from cannabis-related entities.

• → [Federal Tax Revenue from Cannabis] — While states collect significant taxes, federal tax revenue from the cannabis industry will remain suboptimal due to the challenges of tracking and collecting cash-based transactions.

One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.