Derek Peterson, Chairman and CEO of the publicly-traded company Terra Tech Corp, was denied a life insurance policy based on his affiliation with the cannabis industry.
A letter was sent to Peterson by Mutual of Omaha, notifying him that “we cannot accept premium[s] from individuals or entities who are associated with the marijuana industry.”
The letter, dated June 13th, contains significant grammatical errors that affect the meaning of the response, such as, “WE ARE REGULATED BY THE AGENCIES OF THE,” which calls into question the reasoning behind their decisions, whether it be a fear of a specific government threat or simply an excuse.
“This was to get some additional coverage for me personally, my family,” said Peterson. “On a personal level, to have something like this happen, where I can’t get protection for my family … it just seems ridiculous and archaic at this point.”
On his application, Peterson stated that he uses marijuana, in accordance with Mutual of Omaha’s policies that require an applicant to disclose any and all relevant information regarding the health of the insured.
Peterson’s entrepreneurship within the cannabis industry includes retail businesses in Oakland, California and Nevada, as well as a significant medical cannabis growing operation in Oakland. Due to Terra Tech Corp’s status as a publicly traded company (TRTC), Peterson has experience working with the SEC and other government entities. Access to banking services has been notoriously difficult for employees of the cannabis industry, but obtaining life insurance policies has not been a known issue until now.
While 25 states have legalized medical cannabis and four have legalized recreational cannabis, federal prohibition has kept large financial institutions from interacting with cannabis businesses and individuals. While banks may be attempting to protect their reputation, the results of denying these services have been deadly.
Financial expert Julie Hill of the University of Alabama School of Law points out that “knowingly engag[ing] in a monetary transaction in criminally derived property of value greater than $10,000.”
“These and other laws make it very risky to accept any money that you know comes from a marijuana business, regardless of whether you are a bank,” she said. “This is one account that probably won’t make them much money, yet it could potentially be a really large headache,” she said. “It’s easier to say ‘No, thank you’ than to try to figure out if it would actually cause negative repercussions.”
While the Senate has been making strides in allowing cannabis business to access financial services, banks are self-regulated and are legally allowed to create their own policies, even if they are based on reputational concerns.
Photo credit: Terra Tech Corp