Bank of North Dakota should explore the marijuana business
In 2016 North Dakota voters invited the marijuana industry into the state when nearly 64 percent of them voted for a ballot measure creating a framework for legal access to medical marijuana.
Voters will likely get a chance to expand on the liberalization of state marijuana laws in November, assuming the secretary of state’s office finds no significant problems with signatures turned in supporting a measure legalizing marijuana for recreational use.
However the vote for that measure turns out this year, the marijuana industry is coming to North Dakota, and in one way our state is more uniquely qualified than just about any other to welcome it.
Under the federal Controlled Substances Act, marijuana is still classified as a schedule 1 substance, which is defined as something with a high potential for abuse and no accepted medical use.
One wonders how alcohol doesn’t also meet that definition, but I digress.
Despite ongoing federal prohibitions, the states’ policy trend is in marijuana’s favor.
No fewer than 46 states have now legalized marijuana to one degree or another. Nine states and the District of Columbia have made recreational use of marijuana legal.
Yet, because marijuana remains illegal under federal law, banks insured by the Federal Deposit Insurance Corporation and scrutinized by federal banking examiners are skittish about during business with companies engaged in marijuana-related businesses even when sanctioned by state law.
There was some effort under the Obama administration to provide some assurances to banks looking to work with marijuana businesses, but executive actions can be fleeting from administration to administration.
Meanwhile federal legislation to clear the matter up has stalled.
This situation gives the Bank of North Dakota an edge.
It is backed not by the FDIC but rather the full faith and credit of the state of North Dakota.
The bank is governed by the North Dakota Industrial Commission with external audit oversight from the North Dakota Department of Financial Institutions.
There is little the federal government could do, from a regulatory standpoint, about the Bank of North Dakota working with marijuana businesses operating in accordance with state law.
That, potentially, is a very big opportunity.
The Bank of North Dakota could use its unique status as the only state-owned bank in America to facilitate the capital and banking needs of the state’s fledgling marijuana industry.
Perhaps there are opportunities for the bank to provide similar services to companies in other states, though crossing state lines and creating interstate commerce might obviate the bank’s advantages in operating generally outside of the purview of the feds.
My argument is not that the Bank of North Dakota should get into the pot business. It’s still an emerging industry operating, thanks to the federal government, in a bit of a gray area.
There is risk, to be sure.
But the bank should explore this opportunity.
In fact, our state’s political leadership should ask, specifically, that the bank explore this opportunity.
Letting it pass without at least some scrutiny would be a mistake.