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?
While states have aided the growth of a newly legal sector (at least at the state level), cannabis entrepreneurs have had difficulty getting into banking. Even if they operate legally and by their state's legislation, the continued federal prohibition of cannabis, along with banking leaders' prejudices against cannabis, has hampered financial chances for much of the business.
This is especially true for dispensaries and other businesses that deal with plants, including growers, distributors, and manufacturers, who have bank accounts. Historically, finding banks for these sorts of enterprises was practically hard. To keep an account open, many businesses were obliged to lie to their financial institution about the nature of their activities. 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. Additionally, as the cannabis sector grows more popular (and it is), the necessity for compliant and transparent finance will become increasingly important.
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 lying to your banks: If your dispensary's bank account has gone missing, consider it a warning that it's time to stop lying to your banking institution. Stop concealing transactions and avoid the uncomfortable topic with your bank by breaking the loop. Cannabis businesses have no choice except to mask their transactions for years. That is no longer the case: financial institutions are more eager than ever to bank the sector.
Keep in mind that cannabis banking exists: Approximately 200 banks in the United States are eager to collaborate with cannabis firms in all stages of the sector and all states. About 70 of those banks are working with THC licensees that require cannabis banking services, such as managing dispensary bank accounts, in a compliant manner. Almost all of these institutions are cautious about saying whether or not they will collaborate with the cannabis sector. On the other hand, banking is available, even if it isn't always easy to locate.
Find a banking network: Cannabis banking networks, such as Sprout Processing, were formed in response to the financial challenges that cannabis firms confront. For years, networks like ours have been building new ties; in other words, Sprout Processing can swiftly link you with a bank that deals with cannabis businesses like yours.
It was logical in the past for cannabis entrepreneurs to go to considerable pains to keep their transactions hidden from their 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 has frequently said this, and the nation's two other top examiners, the Office of the Comptroller of the Currency (OCC) and the National Credit Union Association, have backed it up.
When banks collaborate with THC licensees like dispensaries or cultivators, their top priority is to ensure that the money they're depositing is coming from authorized, licensed sources. Put another way, the primary goal of dispensary banks is to prevent money laundering (AML). The bank can meet its legal duties under federal law as long as it can prove to the best of its ability that its money was received via genuine and legal activities.
You should give any financial records linked to the money you desire to deposit to guarantee a seamless transaction and a healthy working relationship with your bank. For complete insight into your operations, the bank will integrate with your company's point-of-sale system as well as your seed-to-sale tracking system wherever possible.
The bank will also require a copy of your business' state license to verify that your company is registered with the state 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. While there are still some growing pains along the road, the industry is in a far better position than it was a decade ago.
Cannabis bank accounts, as well as business processing services, are becoming more widely available. Sprout Processing can assist you in getting your cannabis business ready to take debit and credit cards lawfully, in addition to our network of 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. In an interview, Senate Majority Leader Chuck Schumer (D-NY) stated he wanted to consolidate multiple existing cannabis legislation in Congress into a single federal legalization package. With Democrats in charge of the House, Senate, and White House, a federal cannabis legalization law may reach the president's desk as early as 2021. This would be a game-changer for the sector, as more institutions would be motivated to back us as the stigma associated with it fades, and acceptability grows.
You need a partner who has formed true partnerships and created a proven track record of adaptation if you want to prepare your cannabis business for the sector's future, where transparent and compliant banking will play a crucial role in development and success. Sprout Processing can help you prepare for the bright future of the cannabis industry by providing banking, merchant processing, and a whole variety of financial and professional services. Learn why publicly traded companies and mom and pop shops are using our compliant credit card payment processing solution built for the cannabis industry.
