2018-03-18 / Insight


Lakestone Bank & Trust chief risk officer

Editor’s note: The following question and answer exchange was with Joe Black, chief risk officer with Lakestone Bank & Trust. Black is also chair of the Lapeer City Planning Commission. Q:

Do you believe medical marijuana businesses will have an economic impact on Lapeer County?

Answer:  Yes.

Q: In what way?

Answer: These new businesses will make investments in buildings and consequently raise the taxable value of land in the various jurisdictions. A portion of the tax money paid to the State will make its way back to the communities that are serving these businesses. The businesses will employ residents of the county, providing money that will circulate to other businesses in the county.

Q: How much of a challenge will it be to integrate these businesses into the existing economy? Answer: The largest challenge to communities is to determine appropriate local regulations and locations for these businesses.

Q: Given that Lakestone is a federally regulated business and marijuana is still considered an illegal drug by the federal government, will the bank be able to provide financial services to medical marijuana businesses? Answer: Currently there are rules and regulations in place that require the bank, under penalty of law, to monitor, report and prevent money from illegal activities from entering the banking system to reduce money laundering. The State of

Michigan has determined that medical marijuana use and related activities are legal in the state. There is considerable uncertainty how federal regulators will respond to banks in the state of Michigan providing financial services to businesses that are in compliance with state law. There are financial institutions in other states that are providing financial services to marijuana businesses that are compliant with state regulations where the states have legalized these practices. There are opinions and protections that may or may not remain in place. Lakestone is researching these issues and evaluating its opportunities and related risks. However, the production, sale and consumption of marijua-na remains a federal crime.

Q: If your business is unable to provide marijuana related businesses with financial services, what options will they have to meet their financial needs? Answer: There may be other financial institutions that take the risk and fill the gap in the need for these services. For the most part, the business may remain a cash business, and that results in increased risk and exposure for these businesses.

Q: Has your institution or its trade group worked to ensure that it will be able to participate in this new segment of the economy?

Answer: The answer is yes, but until the issue of marijuana listed as a Substance 1 drug is resolved, there will remain uncertainty and considerable risk for a federally insured institution to participate.

Q: Colorado officials report they’ve collected more than $500 million in tax revenue since legalizing marijuana in 2014. What do you think Michigan can reasonably expect to see in terms of tax revenue?

Answer: I’m not qualified to make that projection, but if they haven’t disclosed related costs to the state as a result of legalization, this may be a misleading figure. I have been discussing the impact of Michigan’s medical marijuana law.

If the voters vote to legalize marijuana for recreational use in

November, I would think both the income and related costs would escalate.

Q: How do you think marijuana related businesses will affect the existing businesses in Lapeer County? 

Answer: The demand for property in approved areas may increase the value of land that is either vacant or under-utilized. With proper zoning and land use planning, issues related to traffic and parking should be mitigated. If recreational marijuana is legalized, there may be increased competition for entertainment based industries.

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