If you are a cannabis business owner, or you work in finance in the cannabis industry, I probably don’t need to explain the problem with banking & cannabis because you have probably experienced the following events. Importantly, the banking issues we will discuss not only affect cannabis businesses, but it also affects employees working in the cannabis industry. Let’s discuss the problem with banking & cannabis in more detail below.
If you are a cannabis business, you have probably encountered a lack of bank funding, bank support, and in some cases, your bank account may have been closed down. These are common issues encountered by cannabis business owners when they are trying to access funding, hold their own funds, or accept forms of payment from customers.
Additionally, lack of banking is also an issue for cannabis industry employees. If you are an employee that works in the cannabis industry, and you have tried to apply for a mortgage loan to purchase a home, you may have been denied solely based on your profession.
Why is There A Problem with Banking & Cannabis?
The problem with banking & cannabis can be attributed to cannabis still being federally illegal in the U.S. Importantly, the possession, distribution, and sale of marijuana remains illegal under federal law. Why is this important? Well, banks are federally funded and regulated. Which means, “any contact with money that can be traced back to state-legal marijuana operations could still be considered money laundering and expose a bank to significant legal, operational, and regulatory risk.”
The lack of funding availability has left the cannabis market struggling for money. With large sums of money being required for licensing, building, and other requirements which often vary by state, anyone wanting to enter the cannabis industry must come up with these funds without a loan from a bank. Additionally, most cannabis businesses are operating with high amounts of physical cash due to the lack of available banking solutions, which makes them high risk for theft. Lastly, employees in the cannabis industry may become frustrated due to the lack of funding they personally can receive.
Solutions for The Problem with Banking & Cannabis
The good news is, in the cannabis industry, we are good at finding loopholes. There are some legal banking institutions that offer cannabis businesses accounts.They will likely have strict requirements and will take a limited number of accounts. For a list of banks working with cannabis businesses, contact us today! There are also a few solutions for dispensaries who want to offer card processing payment options. These solutions are known as “cashless ATM’s”. We provide recommendations for these and on other ACH payment solutions that integrate with your point of sale system.
Lastly, for employees in the cannabis industry, you can apply for a “conventional loan” which is not backed by a government agency as opposed to a government backed loan like an FHA, VA, or USDA loan. This type of loan may require the employee put down a larger down payment on the property they are interested in. This down payment could range from 3% – 20% of the total loan amount. There is also something to be said about the art of being vague, in certain situations, when someone asks you what you do for a living.
If you are interested in learning more about funding or banking in the cannabis industry, or in solutions to the problem with banking & cannabis, contact us for a free consultation, or subscribe for more information on this topic.
