It’s a fact; most marijuana-related businesses are struggling to find a bank willing to provide basic depositary and other financial services to them. This is due to the curious legal status of marijuana as a federally prohibited controlled substance but a legal and highly sought-after commodity under the laws of most U.S. states.
This state of legal limbo, which effectively prevents many cannabusinesses from obtaining cannabis banking services – they cannot get loans, accept credit cards, write checks, do payroll or open accounts for deposits. This greatly increases the risks to which these businesses are exposed in that they must deal with vast amounts of cash and a lot of cash requires a lot of security. It also places the safety and welfare of these business’s employees, customers and patients at risk, as they must carry significant amounts of cash on their persons in order to make legal purchases at retail facilities.
However change is expected with the Secure and Fair Enforcement (SAFE) Banking Act – which will allow financial institutions to bank legitimate marijuana-related businesses in legalized states. Approval of this act will bring rapid changes for banks, credit unions and cannabusinesses.
And the good news is that SAFE Banking Act is now a new law in California. It will provide safe harbor for banking institutions doing business with cannabis companies. Essentially, the law states that financial services and banking institutions are not acting criminally when engaging with a licensed cannabis business.
Banks have begun to explore how technology and collaboration can fill the cannabis banking gap. This will lead to the ability for legal cannabis businesses to secure certain key financial services and products — most notably, the ability to accept electronic payments from consumers, while digitizing their payment processes through direct bank transfers.
Cannabis banking is coming, and the industry needs trusted banks and advisors, such as ourselves for sophisticated banking needs. As the industry continues to expand, the vast amount of money it is generating will most likely become too large to be excluded from the general economy thus there remains hope that the debilitating gap between state and federal law over cannabis banking will be addressed sooner rather than later.