When it comes to marijuana legalization, the conflict between state and federal laws appears to be cause for concern for New Hampshire banks.
Todd Wells, Chief Bank Examiner for the New Hampshire Banking Department, says it's a matter of "reputation risk" for state-chartered banks and credit unions hesitant to establish direct relationships with marijuana-related businesses.
“The other aspect of the reputation risk would be when and if a federal government law enforcement agency or regulator decided to take action, legal or otherwise, against that institution for that sort of activity, and that could certainly introduce some reputation risk," he says.
Wells testified Monday before a legislative commission studying the legalization, regulation, and taxation of marijuana. Despite eight states legalizing pot, it is still illegal under federal law.
The New Hampshire Banking Department has not issued any guidance in connection with banking and marijuana-related businesses.
Wells says New Hampshire can watch and learn from neighboring states, like Massachusetts, that have legalized marijuana for recreational use.
In his written testimony to the commission, Wells says he understands Maine, Massachusetts, and Vermont all have one ore more banks or credit unions providing direct banking services to marijuana-related businesses - primarily deposits.
He writes, "Loan to marijuana-related businesses can be complicated by the possibility of asset seizure by federal law enforcement; if the business assets are used as collateral to secure loans, then the credit quality and repayment prospects would be heavily compromised in the event of asset seizure."
According to the state, the treatment centers authorized to dispense medical marijuana in New Hampshire have established banking relationships with a Massachusetts bank.
The legislative commission, which plans to issue a report by the end of 2018, also heard testimony Monday from David Rousseau, director of the Division of Pesticide Control at the state Department of Agriculture, Markets and Food, and from Matt Simon, New England political director for Marijuana Policy Project.
Simon estimates that 160,000 people in New Hampshire use marijuana, buying upward of $350 million annually, creating an incentive for gangs, cartels, and other illicit actors.
"Prohibition hasn't worked. If it worked we wouldn't be here having this conversation," he said.
The conversation is just beginning, as advocates and critics alike noted Monday.
Rep. Patrick Abrami, R-Stratham, who is chairman of the study commission, repeated his goal for the commission to objectively consider all the facts. He says the issue is not a partisan one in New Hampshire, based on past marijuana-bills filed in Concord in recent years.
"There are a lot of people who think it's inevitable. But if we're going to do it, we want to do it right and I think that's what this commission is about," Abrami said.
"See what worked the best in these other states, if we decide to do it, in terms of structure, regulations, and all that."
The study commission is scheduled to meet next on Dec. 18. At that time, it will hear from an official from the state Department of Revenue Administration, and from Andrew Freedman, the former Director of Marijuana Coordination for the state of Colorado, who now provides consultation.