What should you do if you lose access to your dispensary's bank account?

March 3, 2024
credit card dispensary

Cannabis companies, particularly those that deal with plants, like dispensaries and cultivators, have difficulty obtaining and maintaining essential banking services. That's not to mention prospects for company processing and finance, which have been much more challenging to come by. Here's what to do if your bank refuses to continue serving or rejects your plant-growing business.

What causes marijuana firms to lose their bank accounts?

States have supported the growth of the newly legal cannabis sector, but entrepreneurs have had trouble accessing banking services. The federal prohibition of cannabis and banking leaders' biases against it have limited the financial opportunities for many businesses, even if they operate legally according to state laws.

This applies to dispensaries and other plant-related businesses like growers, distributors, and manufacturers with bank accounts. Historically, finding banks for these sorts of enterprises was practically hard. Many businesses had to lie to their bank about what they were doing to keep their account open. Inevitably, the bank would find the cannabis-related company and close the account. Businesses were compelled to trade solely with cash or lie to a new bank. As a result, the tense cycle persisted.

Of course, deceiving the bank is not a long-term plan. For starters, deception-based partnerships are not a healthy or stable couple. Operating as though your money account may be emptied at any moment makes doing business difficult.

Furthermore, if your bank is unaware of your cannabis business, you won't sell it openly. To begin with, you've alienated your brand and made it impossible to reach out to your target market. As the cannabis industry grows, the need for legal and transparent finance will become more crucial.

Banking is vital for financial accounting, but it also serves as a source of collaboration. They can provide market research, cash management guidance, and financing options, provided they understand the genuine nature of your company.

It is not unusual for cannabis businesses to run out of money in today's world. Don't be alarmed if you find yourself without access to a bank. Contrary to popular belief,

Stop deceiving your banks: If your dispensary's bank account has been closed unexpectedly, take it as a sign that it's time to be honest with your banking institution. Put an end to hiding transactions and sidestepping the uncomfortable subject with your bank by breaking free from the cycle. Cannabis businesses have no choice but to mask their transactions for years. That is no longer the case: financial institutions are more eager than ever to bank the sector.

There are about 200 banks in the United States that are willing to work with cannabis companies in all stages of the industry and in all states. About 70 banks work with THC licensees that need cannabis banking services, such as managing dispensary bank accounts in a compliant way. Almost all of these institutions are cautious about saying whether they will collaborate with the cannabis sector. On the other hand, banking is available, even if it isn't always easy to locate.

Look for a cannabis banking network like Sprout Processing, which was created to help cannabis businesses with their financial issues. We have been connecting with banks that work with cannabis businesses like yours.

In the past, cannabis entrepreneurs had to hide their transactions from banks. There is no excuse when so many institutions are eager to engage with the cannabis sector. Instead of dealing with banks who refuse to support your cannabis firm, look for banking partners who believe in it.

What does it take to keep a dispensary bank account legal and stable?

The Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual of the Federal Financial Institutions Examination Council (FFIEC) and FinCEN's 2014 MRB advice are the standards to which banks operating with cannabis firms must adhere. The FDIC, along with the OCC and the National Credit Union Association, have all supported this statement.

Banks working with THC licensees prioritize ensuring that the money being deposited comes from authorized sources. Put another way, the primary goal of dispensary banks is to prevent money laundering (AML). The bank must provide sufficient evidence that the money it received came from genuine and legal activities in order to fulfill its legal obligations under federal law.

Submit your financial records related to the money you want to deposit. This will ensure a smooth transaction and a good relationship with your bank. The bank will integrate with your company's point-of-sale system and seed-to-sale tracking system whenever possible to provide you with a complete understanding of your operations.

The bank needs a copy of your business' state license to confirm that your company is registered and operating legally.

Cannabis banking has a promising future.

We're well on our way to having a mainstream-accepted legal cannabis sector that can function like any other lawful business. The industry has improved a lot in the last decade, despite some difficulties.

Cannabis bank accounts, as well as business processing services, are becoming more widely available. Sprout Processing can help you set up debit and credit card processing for your cannabis business, working with cannabis-friendly banks. Yes, merchant processing for dispensaries and producers is included as well.

In addition, majority leaders in the United States Senate have explained that cannabis reform would be a priority in 2021. During an interview, Senator Chuck Schumer (D-NY) expressed his desire to combine various cannabis bills in Congress into one federal legalization package. Democrats controlling the House, Senate, and White House may lead to federal cannabis legalization in 2021. This could change the sector because more institutions would support us as the stigma fades and acceptance increases.

To future-proof your cannabis business, partner with someone who has a strong history of forming genuine partnerships and adapting to changes.Transparent and compliant banking will be crucial for the development and success of the sector. Sprout Processing offers banking, merchant processing, and other financial and professional services to help you succeed in the cannabis industry. Discover why both large publicly traded companies and small independent shops are choosing our compliant credit card payment processing system designed for the cannabis industry.

Dashboard reviewing compliant credit card processing for dispensaries.

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