Martin Tobias, a Seattle businessman, is objecting to JPMorgan Chase's decision to close his accounts following a news report on his ties to the marijuana industry, but he says that policymakers share some of the blame for the banking predicament he and other pot-related customers find themselves in.
He detailed his concerns in a Q&A with American Banker carried below.
Tobias is a former Microsoft executive who is now the head of MGT Investments, which develops commercial office properties and invests in technology firms. His ventures include being a landlord catering to pot businesses in Washington State, according to CNBC's series this week on marijuana entrepreneurs. He is also the president of the Washington CannaBusiness Association.
The bank confirmed Friday that it has closed its accounts with Tobias, but company spokeswoman Patricia Wexler said she could not comment on specifically why the accounts were closed. The closures were reported earlier Friday by CNBC.
Speaking generally about the pot industry and the company's policies, Wexler told American Banker that JPMorgan was "closely following federal guidance in this matter." She added that the company does not open accounts with businesses related to the pot industry, and that it takes steps to close the account if it learns an existing customer has marijuana ties.
JPMorgan is far from the only bank to approach the marijuana customers with caution, as many larger institutions have steered clear of the industry.
Wells Fargo told its commercial borrowers in Colorado that they must evict tenants if they are connected to marijuana or find another lender. Recently, the $163 million-asset MBank in Gresham, Ore., chose to withhold its services from cannabis clients just a year after it began serving them.
The following is a lightly edited copy of the interview with Tobias conducted by email on Friday.
Have your personal and business accounts with JPMorgan Chase been closed?
MARTIN TOBIAS: Yes.
Did your work in the marijuana industry precipitate the account closings?
I am a landlord and investor. I am not in the marijuana business touching the plant. I was under the impression that carrying a mortgage on a building that is operating a legal Washington business was not a problem. I am not in the marijuana business. I was given no explanation from Chase why the accounts were closed. They will not talk to me, but they closed them the same day the story came out about me being a landlord to a marijuana business.
What subsequent actions do you plan to take regarding your closed accounts?
Nothing. Chase is within their rights. Chase is not the problem. The problem is the federal regulators and their laws that conflict with state laws around this industry. I wish Chase had talked to me and looked at the actual activity in the accounts (most of them personal), before closing them, but I understand the abundance of caution.
Do you have a sense of where you will go for your future banking needs?
I have many banking relationships. I have no marijuana businesses. The marijuana businesses I know about in Washington State mostly have accounts with banks who have chosen to be in the industry. There are federal guidelines that allow banks to accept deposits in states like Washington, and three banks in Washington have done that. The sad part is that Chase has decided to not be in the business (their decision) and to not even bank the personal accounts of arm's-length investors with a 20-year relationship to Chase. That is a very broad brush.
How does this incident affect your views on the treatment of the marijuana industry by banks?
It is a very confusing time for banks dealing with conflicting and confusing regulations around this industry. I don't fault the banks. It is the politicians and regulators who need to get on the same page.