It is common knowledge that cannabis industry banking comes with many challenges in the United States. Because marijuana is still federally illegal, there are many costly banking hurdles for a cannabis business in the US to overcome. This not only affects the cannabis business but also the safety of the community.
What are the biggest banking challenges?
1. Major credit card companies and most banks don’t participate.
These large institutions would be in danger of losing vital federal insurance and so will usually cancel any account they suspect of having ties to the cannabis industry. An employee of a cannabis business or ancillary businesses are in just as much danger of having their account closed as the business itself.
2. Those that do charge very high fees to offset higher compliance costs.
These are generally smaller local banks and credit unions. They are forced to charge large fees because of the extreme amount of required compliance work that goes into maintaining these accounts. This can make it hard for a smaller business to be able to afford the services they need.
3. Lack of access to loans can stunt business growth.
Without access to loans a cannabis business is reliant on investors with deep pockets to help expand their business. This makes it extremely difficult for small businesses to get off the ground.
4. Cash transactions are the only option for many.
Businesses that can’t find or afford banking services are forced to operate in cash. Not only is this inconvenient but can be dangerous. It is not uncommon for a business owner to have to travel for hours with large amounts of cash, sometimes millions, just to pay their bills or taxes in person.
Is anything being done about this?
The Senate Committee on Banking, Housing, and Urban Affairs met last week to discuss cannabis industry banking challenges and the Safe Banking Act. The Safe Banking Act would allow banks to offer some services to cannabis businesses but also to those business’s employees. Though it is not federal legalization, it is a step in the right direction.
There are also many businesses, products and services being designed to serve as resources for cash management. Companies, including Hypur, offers banks products and services for compliant banking of cannabis monies.
Cannabis Industry Banking currently leaves a lot to be desired but there are solutions on the horizon. Let Adilas420 help you create a plan for your cannabis business. Contact us today to consult on your cannabis business needs.