Options for cannabis banking are still minimal for marijuana entrepreneurs, even though thirty-seven states have legalized medical marijuana and seventeen states permit recreational adult use. Since the federal government still categorizes marijuana as an illegal Schedule 1 drug, national banks fear that doing business with a cannabis-related business means they could violate federal law.
Due to these worries, it remains difficult for cannabis companies to find banks that will even allow them to open a business bank account. Although banking policies may change with the passing of the Safe Banking Act, smaller, local banks and credit unions currently provide the best banking options for weed-related businesses.
What is cannabis banking?
If your cannabis business is growing, you’ll eventually need the support of a bank that can continue to grow along with you. An entrepreneur will typically utilize a cannabis-related business (CRB) banking program to provide access to banking solutions to help you effectively develop and manage your business.
How to find weed-friendly banking services
Due to federal regulations, your first stop for cannabis banking should start with local banks and credit unions, which have to follow fewer federal laws. Once you’ve found the cannabis-friendly banks in your area, begin to narrow down your list by speaking with financial institutions directly.
They must be willing to work with higher-risk customers and ensure your cannabis accounts comply with state regulations. Most banks don’t openly advertise for cannabis businesses as clients, so it doesn’t hurt to ask. Inquire about the bank’s compliance standards, requirements, and reporting procedures. And be ready to produce all the required documentation.
Banking Tips and FAQs
A vast amount of businesses in the marijuana industry have difficulty finding cannabis-friendly banks and payment processors. Unfortunately, federal banks are unable to do business with start-ups in the cannabis industry due to its federal legality status. If financial institutions choose to finance a cannabis related business, they risk a money laundering charge or worse. In states that have not decriminalized cannabis, its’ profits are considered illegal drug money.
Due to federal laws and state regulations, it is smart to save up before starting your business in case financing becomes a challenge. Luckily, more weed-friendly banks and payment processing companies are popping up across the country as the industry grows.
What is the SAFE banking act?
There are currently two bills that would help ease federal banking policy toward marijuana: the Secure and Fair Enforcement Banking Act and the Cannabis Administration and Opportunity Act. The bill that banks would like to see passed is the first one which is also called the SAFE Banking Act.
It will ensure that federal regulators would not have the ability to take adverse action against banks that provide services to legal marijuana businesses. In turn, it would require the Federal Financial Institutions Examination Council to establish specific guidelines for evaluating marijuana banking programs. This legislation passed the House significantly in 2020 and 2021 but has yet to be voted on by the Senate.
Can Regular banks work with cannabis companies?
Yes, but it’s complicated. You’ll want to make sure you understand cannabis regulations within your state and for the bank you choose to work with for business services.
Understanding Cannabis Regulations
It’s not unusual for a start-up to begin operations prior to seeking legal counsel. In the cannabis industry, however, establishing a lawyer is crucial in the early stages of your business. This is heavily due to the fact that marijuana is still illegal under the Federal Controlled Substances Act (CSA). Additionally, each state has its own cannabis laws and regulatory agencies in place. There are states that have medically or fully legalized it, while others have only legalized CBD or none of the above.
Navigating the ever-changing state requirements for a cannabis license, while also remaining within the federal law can seem like an impossible feat. A respected, well-informed attorney will smooth out the process and ensure your cannabis business is safeguarded from legal risk.
Secure Funding, Business Loans, or Investors
Secure funding is a loan in which cannabis companies offer up an asset for collateral against the loan. Around 700 of the 12,000 U.S. banks provide banking services to cannabis businesses. You’ll have a greater chance of approval with these institutions, so we recommend trying them first for your business finances.
Is Fincann legit?
Yes. It’s legal. The cannabis industry recognizes Fincann as a one-stop resource for proven compliant, sustainable, and transparent cannabis business banking, financial services, and advisory. Fincann has provided financial assistance for hundreds of clients across the United States.
Resources for the Cannabis Industry
- Business advice and consultations, payments, lending, and other banking services.
- There are compliant, federally insured depository bank accounts for companies, employees, and vendors.
- Access to a vast range of merchant processing and electronic payment solutions.
- Access to private and institutional commercial lending and cash management services providers.
- Access to the top insurers, payroll services, and industry professionals.
Who do Cannabis banks typically service?
- Insurance companies
- Compliance inspectors
- Delivery services
Cannabis Business Insurance
Having insurance coverage to protect your investments, assets, and product is a necessity. Many cannabis-related business owners choose to rely on insurance from one of the four companies below.
Comparing 420 Friendly Banks
Here, we’ll compare the pros and cons at a few of the top banks for cannabis related businesses.
Partner Colorado Credit Union offers cannabis banking to over five hundred cannabis accounts through Safe Harbor Financial, a Partner Colorado Credit Union division. You’ll have to complete an extensive application process that generally takes three weeks to qualify. The method includes submitting detailed financial records, an interview process, a site visit to the business, and a third-party compliance audit.
There is access to armored carrier services for the approved businesses for daily cash deposits. A bonus: once you have maintained a cannabis account with Safe Harbor for a year, cannabis business owners will be eligible to apply for commercial real estate loans and home mortgages.
Salal Credit Union offers a variety of cannabis banking services within its community. Cannabis-related businesses will qualify for an account manager, same day cash pickup and delivery services, and employee banking services. Your business can apply for secured capital loans and commercial real estate loans. Membership eligibility includes licensed companies whose operations are in Washington and Oregon. You’ll need to show solid financial goals and good credit to be approved during the application process.
North Bay Credit Union is a financial institution in California that has been offering cannabis banking services since 2017. It offers CBD, hemp, and cannabis business checking accounts, whose banking services include electronic processing services and bill payment, mobile deposit, and digital banking.
The application fee costs 1,000 USD and is nonrefundable. If your business is approved, your monthly payments are assigned based on North Bay Credit Union’s risk assessment of your business operations. It generally takes thirty days to open cannabis accounts fully.
To qualify for their cannabis banking services, you’ll need to meet one of the following criteria:
- The business is in Sonoma, Marin, Napa, or Solano County
- Membership in the California Cannabis Industry Association
- Membership in the National Cannabis Industry Association
- Membership in the Sonoma County Farm Bureau
Cannabis Friendly Bank List
- Blue Sky Financial
- Green Check Verified
- Numerica Credit Union
- Timberland Bank
- MAPS Credit Union
The Bottom Line
While cannabis banking may be challenging to find and qualify for, it’s not impossible and gets easier each year. Try first looking to your community banks and credit unions for your cannabis business banking. At least until the Safe Banking Act or something similar passes so that banks can receive more significant guidance from the federal government.