While opening bank accounts for cannabis businesses may be challenging, they can still safely deposit funds and build savings and credit. Financial Institutions will need to implement strict operations and cash management best practices; but for companies operating within an increasingly regulated industry it can be well worth their while.

Invoice Financing

Invoice financing enables businesses to obtain cash advances based on the value of unpaid invoices, providing cash for essential business needs. Finance providers offering short-term funding options allow companies to quickly capitalize on growth opportunities without delay. Invoice financing can also provide relief during times of emergency, such as natural disasters that damage inventory or any disruption from suppliers or bankruptcy of key customers. Lenders typically prefer businesses with strong financial histories and diverse customer bases, and may require personal guarantees in order to secure funding. Furthermore, lenders will assess existing debt obligations to determine if your business can repay its loan obligation in full.

Before seeking invoice financing, be sure to compare rates and fees in detail in order to find the most cost-effective solutions.

Real Estate Loans

Evergreen loans (commonly referred to as sustainable financing) provide green businesses with access to capital they need for environmentally-friendly activities such as reforestation efforts or renewable energy projects. Accelerators can accelerate the transition towards a net zero carbon economy by providing necessary capital. They may also help attract investors and strategic partners who prioritize sustainability and environmental impact as part of their agenda. Evergreen loans provide an avenue for international cooperation by allowing investors from various nations to pool their resources for environmental projects in vulnerable regions – for instance funding large-scale reforestation efforts together.

Casual Loans

Casual workers may benefit from casual loans, which are unsecured personal loans designed specifically to cater to those without traditional proof of income. Funds will be directly deposited into your bank account so you can spend it how you please – just meet your repayment commitment each week, fortnight or month! Casual workers may also look into low-doc home loans which allow them to qualify for mortgages without providing documentation with typical proof of income requirements – although they usually incur higher interest rates.

Cannabis businesses operating legally require banking services. Most banks do not provide them due to additional monitoring, due diligence requirements, and staffing needs associated with cannabis banking services.

Instead, growers, dispensaries and ancillary businesses often must manage huge sums of cash – creating risks such as theft, skimming and robbery – but with proper approach and strategy secured banking options are achievable.

1. Know the Rules

Legal cannabis businesses are growing quickly across the nation, while federal banking regulations lag behind. Due to anti-money laundering regulations, financial institutions often remain reluctant to work with this sector, leaving legitimate, law-abiding businesses to operate solely using cash, which poses risks both to customers and employees alike.

To address this complex situation, ICBA supports the SAFE Banking Act. This bill would enable banks to provide basic services to cannabis-related businesses without fear of government or regulatory reprisals.

This bill would ensure that industry businesses are held to account for their business activities, making them more transparent and less likely to participate in illegal activity. Even if an institution opts not to offer cannabis banking, its BSA officers must understand how to assess risk accurately and adapt policies appropriately – for instance when considering hemp/CBD related accounts it must refer back to state/local laws when making risk evaluation decisions.

2. Be Prepared

Cannabis banking can be complex and time consuming. Financial institutions must be able to demonstrate that each dollar of revenue generated from legal sales; additionally they must meet federal and state reporting requirements and submit tax reports as required. All this takes up both time and resources – which explains why financial institutions charge cannabis accounts a fee.

The SAFE Banking Act would ensure that federal regulators would not take adverse actions against banks that provide services to state-legal marijuana-related businesses (MRBs). While it has passed several times through the House of Representatives, it has yet to reach the Senate floor for voting.

Cannabis operatorss can prepare themselves for banking by demonstrating financial health and handling cash responsibly, being open with potential bank partners, and working with an institution that understands cannabis. Green Check Connect helps FIs build cannabis banking programs through our marketplace of verified operators and suite of tools designed to make onboarding smoother for both parties involved.

3. Demonstrate Financial Health

Financial transactions such as electronic payments, money transfers and ACH have become more widespread, necessitating businesses to use electronic platforms instead of cash for transactions. Cannabis banking facilitates these digital transactions while increasing record keeping efficiency as well as meeting tax and legal compliance. Furthermore, its increased efficiency of payments could help dispensaries attract additional investors.

Even though marijuana is legal in an increasing number of states, its federal illegality makes accessing financial services difficult for cannabis-related business (CRB). Banks and credit unions remain reluctant to work with CRBs because they fear breaking the law by doing so.

To overcome lenders’ hesitation when working with marijuana-related businesses, lenders need to fully comprehend both risks and rewards associated with working with such enterprises. Abrigo’s team of former bankers and BSA Officers can assist your institution with developing policies to stay compliant when providing cannabis-related banking. Check back here regularly for on-demand webinars featuring Abrigo!

4. Be Transparent

Cannabis is still a relatively young and emerging industry, and banks understandably remain wary about providing banking services to cannabis businesses that operate legally within state borders. Most financial institutions that do provide such services remain discreet about it and keep a low profile when offering them.

Banks and credit unions that choose to work with CRBs must still abide by anti-money laundering (AML) laws, perform extra customer due diligence checks and report suspicious activity reports.

Marijuana and hemp-related businesses (MRBs) continue to thrive despite federal prohibition, yet without banking options most legal, fully compliant MRBs operate solely on cash; this poses both regulatory difficulties as well as security threats to millions working in this sector. When these MRBs gain access to safe banking services that work reliably for everyone involved – everyone benefits! To speed up this process it’s essential that businesses be transparent during application procedures – having all required documents organized can speed things along significantly; click here for our guide on preparing cannabis banking application procedures!

As 36 states now permit cannabis use, financial institutions cannot ignore this rapidly expanding industry – but must also be prepared for its unique compliance challenges.

For optimal risk mitigation, banks should define their risk appetite with banking CRBs and create systems to prioritize compliance. This may involve using AML software to detect suspicious transactions as well as KYC solutions that efficiently onboard and verify customers.

Legality

Legality is an issue of great concern to the cannabis banking industry. Although state-sanctioned businesses should have access to traditional banking services, federal prohibitions remain an obstacle.

Due to regulatory enforcement and potential reputational damage concerns, many bankers have been reluctant to work with cannabis clients; however, due to an increasing demand for banking services they are reconsidering their stance.

Banking cannabis clients is costly, as it requires additional staff to comply with bank secrecy and anti-money laundering laws. One banker could oversee as many as 30 cannabis customers compared with regular business.

Cash-only solutions pose operational issues for cannabis businesses, including increased safety risks associated with robberies and theft, tracking expenses accurately for tax filing purposes and providing employees with adequate retirement plans (401(k).

Regulations

As more states legalize marijuana, banks are looking for ways to support this growing industry. Unfortunately, federal laws and banking regulations present many hurdles; banks risk prosecution for money laundering if they work with cannabis-related businesses (CRBs), even when state laws allow these operations legally.

Although cannabis businesses have experienced considerable de-stigmatization and steady progress toward legalization in state after state, most federally chartered banks continue to reject them as viable customers, forcing companies to keep large sums of cash on hand – leaving them exposed to theft or other crimes.

To combat the issue, some states have implemented closed-loop payment processing systems wherein the state acts as the payment processor. This enables states to monitor and track tax payments from dispensaries as well as purchase payments from consumers more easily while eliminating cash handling which poses security concerns for employees and customers alike. Banks should assess risks by tiering cannabis clients according to risk; Tier 1 represents those considered the lowest.

Technology

Prioritizing compliance can make banking accessible for cannabis businesses, ensuring adherence with regulations and lowering risks associated with fines or damage to reputation; further enabling efficient growth while drawing investors.

Cannabis businesses that lack access to traditional bank services have often been forced to operate all-cash, making their operations vulnerable to theft and crime. Now there is hope: federal lawmakers have proposed the SAFE Banking Act which creates an exemption that enables financial institutions to actively bank cannabis-related businesses.

Such solutions would enable these institutions to accept deposits and lend money without fear of violating CSA or anti-money laundering laws, and could codify into law the stringent know-your-customer standards already required by FinCEN guidelines. Nonetheless, their effectiveness relies heavily on regulatory changes, industry collaboration, and ongoing technological improvements.

Compliance

As more states legalize cannabis, financial institutions need to understand its implications. Although cannabis remains illegal at a federal level, banks can still service marijuana-related businesses (CRBs) provided they abide by certain procedures and comply with suspicious activity monitoring requirements.

ICBA supports legislation which would create an effective safe harbor from government and regulatory reprisal for community banks serving Cannabis Retail Businesss (CRBs). Such protection should extend to “ancillary” services provided such as commercial landlords, accounting firms, utility providers and others who may receive payments derived from cannabis sales proceeds.

Last week, bipartisan senators introduced the SAFE Banking Act as a positive step in the right direction. But it must be kept in mind that this bill only provides limited bank access for marijuana businesses; true solutions lie with federal authorities and their banking industry counterparts.

Robbers in movies typically leave behind bags of cash marked with an indelible ink signature; state-legalized marijuana-related businesses typically only possess cash as means of transaction.

Cannabis companies with revenue that must be stored in cash have an extreme difficulty accessing banking services, leaving their revenue vulnerable to criminality. But could the SAFER Banking Act change that?

Legality

Federal legislation was recently proposed that would help marijuana-related businesses access banking services they require. Known as the Secure and Fair Enforcement Regulation Banking Act (SAFER), this bill could alter how banks, credit unions, insurers and other financial institutions do business with cannabis-related businesses.

If it were to pass, this bill would prevent the Treasury Department’s Financial Crimes Enforcement Network from discouraging or prohibiting depository institutions from providing banking services to cannabis-related businesses and codify FinCEN guidance on “BSA Expectations Regarding Marijuana-Related Businesses.” However, although exempted by law from certain requirements that otherwise apply in other highly regulated industries (like know your customer standards and ongoing suspicious activity monitoring), certain requirements remain that remain for these institutions as part of this bill.

MRBs seeking bank accounts should prepare an exhaustive set of documentation that they can share with potential banks, and form close ties with their banker in order to avoid any red flags that may trigger a BSA review or forfeiture action by the federal government.

FinCEN Guidelines

New York state-chartered banks and federally chartered and supervised credit unions may bank state-licensed cannabis and marijuana-related businesses if they implement an appropriate policy and technology to manage BSA compliance and risk effectively, including making sure customer accounts do not tie to CRBs, conducting risk-based customer due diligence procedures, and monitoring transactions that align with each institution/entity’s business plan, risks, and management capabilities.

As the SAFE Banking Act progresses through Congress, financial institutions will have an opportunity to improve their cannabis-related policies and conduct an in-depth risk evaluation of these accounts. This evaluation should identify activities with lower risks versus those with greater risks; ensure compliance with Cole Memo enforcement priorities or any rescinded Guidance regulations; identify red flags; review documentation and carry out ongoing transaction monitoring as a part of ongoing transaction monitoring – ultimately the cannabis industry cannot flourish without access to safe banking.

Risk Assessment

Due to federal prohibition against marijuana, banks and financial institutions that work with cannabis businesses face a higher risk of money laundering (a federal crime) than when working with other industries. This is because transactions conducted by marijuana businesses involve large sums of cash which may pass for legitimate business activity when reviewed by anti-money laundering experts.

As such, many financial institutions remain cautious of working with cannabis companies or at best limit their relationships to deposit-only services. But as stigmatization recedes and state legalization increases, more banks are creating programs tailored specifically towards this industry.

As part of their risk analysis when working with MRBs, potential institutions should assess state legality as well as reputational risks associated with being known as “weed banks.” BSA officers should review any prior SAR filings related to MRBs that have occurred and assess the likelihood of additional filings in the future.

Regulation

As state-level legalization spreads, financial industries cannot overlook this lucrative market sector. Unfortunately, federal law still stands as an impediment to safe banking for cannabis companies; though DOJ rescinded their Cole Memo, FinCEN guidelines remain effective ‘know your customer’ directives that limit banking options available.

There are currently legislative efforts afoot that could facilitate reform. The SAFE Banking Act seeks to shield banks, credit unions, lenders and other financial institutions from any legal repercussions when engaging with state-legal marijuana businesses or providers; additionally, this bill extends beyond FinCEN guidelines by covering payment processing services, mortgage lending agreements and insurance (in addition to deposit accounts).

Even with these obstacles in place, many community banks remain willing to provide MRBs with banking services if approached correctly. Clear communication with clients will ensure they understand what’s expected of them – this approach should prevent them from getting bogged down with banking jargon or legalese and could ultimately make more likely sign on as clients.

While many banks remain unwilling to work with cannabis-related businesses (MRBs), credit unions and community banks have begun venturing into this emerging market. Legislation has also been introduced in order to lessen any financial obstacles MRBs face.

Banking CRBs entails significant risk, yet by creating and adhering to an AML/CTF program and adhering to stringent compliance protocols a strong AML/CTF program can protect from reputational, legal and regulatory damage.

From Taboo to Mainstream

Banks tend to shy away from banking marijuana businesses. Federal prosecution threatens the industry, forcing most state-legal cannabis-related businesses (CRBs) that operate legally to operate solely with cash transactions instead of tapping mainstream financial services for financing purposes. This puts them vulnerable to criminal exploitation as well as restricting them from accessing mainstream financial services.

Thankfully, however, things may be changing for the better. ICBA has been pushing to pass the SAFE Banking Act, which would ensure federal regulators cannot threaten to withhold deposit insurance or downgrade loans made to banks that work with state-legal CRBs; Green Check Verified was founded to assist banks navigate this risky landscape; Green Check Verified’s services have also emerged to assist. But banks must still do their research and stay compliant with federal laws while being aware of five myths regarding banking marijuana-related businesses.

FinTech Solutions

FinTech, or financial technology, has become an invaluable tool in solving the banking issues facing the cannabis industry. These solutions are tailored specifically for this sector to increase compliance and operational transparency while encouraging growth and financial inclusion within an underserved market.

FinTech companies are helping CRBs reduce their reliance on cash transactions with solutions such as digital wallets that connect directly to bank accounts, enabling consumers to purchase products and services from CRBs using virtual currency.

FinTech tools such as anti-money laundering software automate compliance processes to eliminate human error, meeting regulatory requirements. KYC solutions facilitate efficient customer onboarding and verification procedures to adhere to AML and CFTC regulations while mitigating risk through decreasing the number of accounts tied to CRBs.

Regulatory Technology

Cannabis companies require access to financial services essential for daily operations, including deposit-taking, payment processing and merchant services. Without this support, their ability to operate efficiently and build trust among consumers and stakeholders would be severely limited.

FinTech solutions are responding to this problem by creating tailored compliance frameworks and cutting-edge technologies – such as blockchain-powered seed-to-sale tracking systems that ensure transparency and immutability.

States play an essential role by passing legislation to create closed-loop payment processing systems that ensure tax payments from cannabis corporations and purchase payments by consumers are sent directly to states for processing, eliminating cash handling. This helps minimize money laundering and terrorist financing activities while as cannabis-related business (CRB) transactions become mainstream banks must continually evaluate their risk tolerance in order to best support new customers.

Payment Solutions

Cannabis business owners want their company to be treated like any other, and this includes accessing banking services. Banking services enable cannabis entrepreneurs to invest in growing their company – hiring more employees, carrying new brands at their dispensaries or opening additional locations – opportunities which benefit communities as they expand.

Banks can assist cannabis businesses by offering ACH payment solutions. Furthermore, banks can assist by providing AML software and KYC solutions that effectively screen for risk. Finally, banks may provide seamless cryptocurrency on-ramps that make transitioning back into fiat currency easier for cannabis businesses – thus decreasing cash-flow risk while protecting them from volatile virtual currencies and giving more flexibility when planning and forecasting profit streams.

Developing a Solid Banking System

Cannabis industry transactions are becoming an increasingly lucrative venture and, while they typically take place using cash transactions, financial institutions (FIs) that choose to provide CRB services must ensure they update policies and procedures to reflect this decision and ensure BSA compliance. FinTech firms that specialize in regulatory technology offer advanced software systems that provide greater financial transparency while verifying adherence to complex compliance protocols while simultaneously permitting electronic commerce transactions reducing dependence on cash.

State-level laws such as SAFE Banking legislation can also provide valuable assistance, preventing federal regulators from taking adverse actions against banks that provide services to state-legal MRBs. Banks which successfully balance compliance work streams while offering comprehensive banking solutions will find success in this new market – competition is fierce!

As marijuana-related business owners await the passage of SAFER, they require alternative banking solutions. Fintechs have emerged to fill this void, from closed-loop payments systems to automated compliance platforms.

Sprout Processing provides cannabis businesses with a digital payment option that enables consumers to make purchases quickly online, in-store or via delivery with just one tap. Furthermore, its software automates compliance monitoring and reporting procedures in order to increase efficiency while upholding regulatory adherence.

1. Closed-Loop Payment Systems

Cannabis businesses looking for solutions that help meet compliance, payment processing and operational transparency requirements have turned to FinTech solutions in response to restrictive banking laws and limited traditional bank services. These innovative approaches offer customizable strategies for compliance, payment processing and operational transparency with their effectiveness dependent on regulatory changes, stakeholder collaboration and continued technological innovations.

Closed-loop payments are an increasingly prevalent phenomenon. Consider traditional gift cards where consumers add value to a card they can only use at specific retailers, or mobile apps like Venmo and PayPal that enable users to link their bank accounts and transfer money among each other directly.

Closed-loop digital payments systems for cannabis dispensaries allow customers to make transactions using debit cards linked directly to their personal bank accounts at your dispensary, enabling customers to spend up to 30% more than using cash alone and creating an effortless customer experience. Aeropay offers one such compliant bank-to-bank digital payments solution;

2. Mobile Payment Apps

Cannabis retail success depends on a range of factors, one being offering consumers fast and straightforward payments. As such, closed-loop payment systems and prepaid cards have become increasingly popular as they enable customers to bypass ATMs at point of sale to make payments directly at sale point.

Fintech companies have recognized an opportunity to address this need by providing solutions tailored specifically for the cannabis industry’s banking challenges, including providing tailored banking infrastructures and compliance frameworks.

Aeropay, for example, provides cannabis-compliant bank-to-bank digital payments using an ACH process. Businesses using it can connect directly with customers’ bank accounts rather than going through card networks or using checks, wire transfers or cash. Setup is fast and requires minimal data input – making it simple and fast for dispensaries to onboard new users while adhering to all ACH network regulations for safe funds transfer.

3. Automated Compliance

Cannabis remains a high-risk industry for financial institutions. To effectively work with this sector, banks must create and implement an extensive compliance program encompassing onboarding processes as well as ongoing monitoring and enforcement of state laws and regulations.

Enhance due diligence is another cornerstone of compliant cannabis banking, as the industry’s high-risk status necessitates an increase in regulatory filing and reporting requirements. Confia is here to help institutions meet this obligation while assuring customers are compliant with state regulations.

One financial institution which automated their cannabis banking program experienced significant time savings on compliance tasks, process improvements, and meeting examiner expectations. Leveraging Metrc as the industry ecommerce platform enabled them to streamline their work while expanding their program; now managing over 120 CRBs with ease and enjoying overall higher levels of compliance.

4. Cryptocurrency

With cannabis now legal in many US states and an anticipated global market of $20 billion projected, its industry relies heavily on access to secure, robust and straightforward financial services. Unfortunately, due to cannabis remaining a Schedule 1 drug at the federal level, banks remain reluctant to provide these essential tools, leaving many operators and customers solely dependent on cash payments for operations and transactions.

Cryptocurrency and its underlying blockchain technology offer an effective solution. Companies like Tradeshift allow the creation of security tokens which customers can purchase to pay for cannabis products. Coupled with an in-loop payment system, these digital tokens provide both businesses and consumers with a safe, discreet means of conducting transactions while creating legally transparent records that help ensure legal transparency. Transaction fees are lower; unlike credit card processing, settlement occurs almost instantaneously.

Trailblazers are individuals who take risks to make an impactful difference. From literally blazing trails in the forest to changing lives on an individual level such as Supreme Court Justice Ruth Bader Ginsburg, trailblazers are change agents.

Commissioner Concepcion was appointed to the Cannabis Control Commission’s social justice seat in 2021 and has subsequently written many op-eds regarding equity issues within the industry.

1. Janet Matula of Gelato Canna Co.

Cannabis industry has experienced incredible growth over the past several years, even as some regulatory issues still linger.

Janet Matula has been instrumental in popularizing cannabis. As director of business development and compliance at Gelato Canna Co, located in California, she ensures products that are bold, colorful and happy-making are produced.

She has played an essential part in taking the company where it stands today.

Shanita Penny has made her mark as both an activist and entrepreneur in the cannabis space. She currently works as a lobbyist for the National Organization for the Reform of Marijuana Laws (NORML), as well as being founder of Budding Solutions – a boutique cannabis consultancy offering assistance for clients looking to establish and scale compliant businesses. Furthermore, she serves as director of Coalition for Cannabis Policy Education and Regulation’s Center of Excellence which champions social equity policies to increase diversity, equal access and economic empowerment for clients.

2. Amy Brown of Brown’s Botanicals

As with any new industry, cannabis presents many questions and challenges for credit unions. ICBA is currently working closely with credit unions to develop best practices and assist them as they explore its many opportunities.

Though legal in many states, marijuana remains unlawful at a federal level and this has crippled its industry by forcing businesses to deal in cash transactions that may put them at risk of theft, violence, muggings or money laundering.

But things are beginning to change as legislators take steps to address the issue. On September 27, the Secure and Fair Enforcement Regulation Banking Act was unanimously passed by the Senate Banking Committee with bipartisan votes of 14-9 and awaits full Senate floor vote. This law ensures federal regulators cannot penalize banks that provide services to state-legal MRBs; additionally, it mandates the Federal Financial Institutions Examination Council create uniform exam guidelines for evaluating cannabis-related businesses.

4. Sarah Stephens

With federal cannabis still illegal at a federal level, banking providers for this industry are scarce. We will learn how these businesses have overcome challenges to secure bank accounts for themselves.

Banking-related legal issues are complex, and banks must fully comprehend how they function within an evolving marketplace. This requires understanding federal legislation like SAFER Act as well as state regulations like licensing and taxation requirements.

Katrina Skinner, Partner in Burns & Levinson’s industry-leading Cannabis Business and Law Advisory Group, assists regulated cannabis, hemp/CBD financial institutions establish comprehensive regulatory structures and compliance frameworks that will guarantee their long-term viability. Her unparalleled industry expertise and gravitas have allowed her to solve “first time” issues for clients across the nation while shaping the legal landscape of cannabis in many states. As lead author of Burns & Levinson’s industry-leading Cannabis Compliance Manual she frequently speaks on emerging legal issues facing this rapidly developing sector.

Innovative tech is revolutionizing how cannabis businesses operate. As customers migrate from physical shops to e-commerce platforms, the industry needs banking solutions that allow it to digitalize its business operations.

Current cash transactions between cannabis businesses can be time consuming and create inefficiencies in revenue tracking, tax reporting, payroll processing and accounting processes. Therefore, this industry needs a system which is reliable, secure and compliant.

1. Payment Gateways

As cannabis-related businesses expand, it’s crucial that they have access to legitimate banking solutions. Without such access, companies risk shutting down or facing serious consequences due to noncompliance with state and federal regulations.

Companies looking to enhance transparency may provide ACH transfers that integrate with their POS system and allow customers to easily purchase products at the counter and have funds directly deposited into their accounts – saving fees associated with PIN debit transactions.

Not only can these solutions increase revenue growth, but they can also attract and retain clients that may otherwise be disenfranchised by traditional banks. This can create long-term partnerships that extend beyond basic banking services to include advisory and investment opportunities – strengthening a financial institution’s status as an essential partner.

2. Fintech

Fintech companies are providing cannabis businesses with secure banking solutions online. This is crucial, since many activities related to cannabis cannot be accomplished using Visa and Mastercard due to how payments networks screen transactions for potential money laundering risks.

These solutions also assist cannabis-related businesses to save both time and effort by handling all accounting, payroll and business transaction processes on their own using these systems. This enables businesses to operate more efficiently while remaining compliant with regulations.

These fintechs also enable cannabis-related businesses to use cryptocurrencies, like Bitcoin, which provide greater transparency and security. Some even provide their own cryptocurrency that’s tailored specifically for cannabis businesses to reduce money laundering risks while providing consumers with a smoother experience.

3. Wallets

COVID-19’s pandemic has caused many consumers to switch shopping methods in favor of those which offer convenience-driven solutions, including P2P payments and mobile closed-loop digital transactions. Cannabis businesses can capitalize on this change in purchasing habits with payment technology which eliminates cash exchanges while simultaneously improving consumer experiences.

Fintechs such as Dutchie and Mobius Pay offer wallet solutions as an example of how fintechs can address the cannabis banking gap by offering safe and secure payment solutions that circumvent banking regulations. Customers can purchase products online before having them delivered through closed-loop ACH bank transfer.

CanPay has developed a cashless ATM system, similar to traditional ATMs but enabling debit card purchases without breaking banking regulations. By eliminating physical exchange of cash transactions with physical cash machines, CanPay’s cashless ATM provides another solution that enables dispensaries to accept credit cards while adhering to banking regulations.

4. Mobile Apps

Fintechs have emerged to address banks’ legal and compliance concerns regarding cannabis-related businesses (CRBs). Companies such as Infused Banking, Dutchie Pay and Mobius Payments offer CRBs the ability to accept online payments while depositing them directly into their merchant bank accounts.

Safeguarding large sums of cash can be challenging for dispensaries, making them susceptible to theft and robbery. Furthermore, as customers increasingly pay with cards rather than cash-intensive businesses risk losing market share.

Financial institutions can accelerate revenue growth by offering cannabis banking solutions. Beyond low-cost deposit growth, cannabis banking solutions also offer lending, wealth management and investment opportunities – prioritising efficiency while meeting compliance is the key to long-term relationships between financial institutions and their target audiences.

5. ATMs

Cannabis related businesses (CRBs) need a banking system that meets their consumer, regulatory, and merchant processing needs. As with other high-risk industries that cannot secure traditional bank services, fintechs are providing viable solutions.

Some dispensaries have relied on an illegal workaround that makes sales payments look similar to ATM cash withdrawals; however, Visa recently issued a statement noting these systems violate its core rules and product/service rules, and could contribute to money laundering activities.

Another option available to commercial cannabis businesses is renting or owning an ATM on-site so their customers can make purchases using cash. This allows the business to better track these transactions against its seed-to-sale records in order to avoid potential money laundering issues.

Many cannabis businesses find it challenging to secure bank accounts, credit cards and loans; this limits their financial flexibility and forces them to rely solely on cash-only policies.

Federal banking regulations and stigma surrounding cannabis companies make it challenging for banks to provide services tailored specifically for plant-touching companies, yet some banks offer cannabis-friendly services. Despite these hurdles, however, some banks offer cannabis-friendly services.

1. Know Your Limits

Cannabis business owners may find their banking options limited, forcing them to either deal exclusively in cash or use questionable tactics which could put their operations at risk.

Bank accounts and financial services don’t need to be difficult for anyone; here are a few tips to help navigate your journey successfully.

Before approaching banks, be prepared to provide in-depth documentation of your company’s operations – the more transparent, the better. Also, establish strong relationships with bankers early as this increases your odds of securing services more easily. Lastly, anticipate paying additional costs such as onboarding and monitoring fees; these may seem excessive; however, extra revenue generated can often more than make up for them and offer attractive return on investment for cannabis-friendly banks.

2. Know the Rules

Cannabis business owners should take steps to ensure they have all of the documentation needed for an easy application process. Compiling all this information early can save time and prevent delays during approval processes.

Banking industry regulations stipulate that it adhere to strict federal standards that prohibit money laundering and illicit finance activities, so financial institutions working with the cannabis industry must establish additional monitoring and appoint someone responsible for closely overseeing each account in their portfolios and reporting any suspicious activity to FinCEN (Financial Crimes Enforcement Network).

Cannabis businesses must avoid sudden account suspensions or closures to remain compliant with federal regulations, making the burdensome costs associated with financial relationships all the greater. It is therefore essential for cannabis businesses to provide sales verification from point-of-sale systems as part of compliance monitoring and filing to be ready.

3. Know Your Options

Cannabis businesses may attempt to conceal their affiliation with the industry, but FIs have become adept at identifying Cannabis Regulation Businesses (CRBs). Sooner or later, your bank is bound to discover you are involved with CRBs; it’s only a matter of when. Once found out, banks typically shut down accounts associated with CRBs while blacklisting anyone involved from opening future accounts with them.

This setback for the cannabis industry and entrepreneurs alike can impede access to credit and financial services from banks, forcing them to look elsewhere for financing such as private loan issuers or angel investors for accessing capital for expansion of their businesses. There are still banks which will work with cannabis-related businesses by providing banking and merchant services; these FIs often charge an additional compliance cost fee associated with banking marijuana-related businesses.

4. Know the Risks

As cannabis legalization spreads to more states, businesses are experiencing significant growth and require banking services for expansion. Unfortunately, federal prohibition still prohibits many financial institutions from working directly with this industry.

Cannabis-related businesses (CRBs) tend to operate on cash alone, leaving them susceptible to theft and other risks. Furthermore, CRBs may struggle with payroll processing and other business services and eventually needing to pay employees either by mail or pay in person which is costly and ineffective.

Companies looking to venture into the cannabis industry must abide by stringent FinCEN guidelines and conduct anti-money laundering/suspicious activity monitoring, in addition to working closely with legal and compliance subject matter experts to create programs suited for this environment. Furthermore, keeping abreast of changing legal and regulatory landscape is key for understanding risks associated with cannabis banking as well as determining if taking this opportunity makes financial sense for them.

As cannabis businesses expand, they require banking services. Unfortunately, federal law makes it challenging for banks to work with cannabis businesses as it remains an illegal controlled substance.

The SAFE Banking Act seeks to change that by providing bankers serving cannabis-related legitimate business with safeguard protections that reduce cash-only operations, an unsafe and costly practice. This may help businesses reduce the need to operate under such conditions.

Community Engagement

Cannabis legalization continues its rapid spread worldwide, providing banks with an opportunity to offer services to an emerging industry while raising a number of ethical concerns.

Ethics are at the core of cannabis banking, and you should strive to do what’s right. Ethical banking will bring value both to yourself and your clients.

Community engagement is one of the key ingredients to ensure equitable growth in the cannabis industry. Many states have established social equity programs designed to increase participation from communities that have been adversely impacted by cannabis prohibition.

These programs typically provide education and training for individuals interested in entering the cannabis industry. Courses focus on financial literacy, business plan creation, administrative skills development, regulatory compliance issues and cultivation practices – many are available both online and on site – helping dispel stigmas while inspiring community members to take control of their financial futures.

Transparency

Transparency is an integral element of banking ethics. This includes providing customers with accurate information and ensuring cannabis businesses comply with regulations to reduce product recalls, label suits, and consumer class actions.

Ethical banks avoid investing in tobacco, alcohol, fossil fuels and other industries that engage in unethical practices; they provide support to women, minorities and the environment.

Ethical banks also foster pay equity by offering realistic salary ranges and making the information transparent to their consumers, helping to avoid discrimination while drawing candidates whose compensation expectations align with those available salary options.

Social Equity

As legalization spreads, ensuring all businesses can access financial services will become increasingly crucial to the industry. Upholding ethical considerations in banking practices will help level the playing field for cannabis-related business (MRB) owners who rely on cash rather than mainstream bank services.

As the industry expands and risks associated with product contamination and label claims increase, access to funding and capital will become even more essential for small businesses looking to develop, test and market their products.

Some states, like Oakland, offer verified social equity applicants licensing priority and startup support such as incubator space and funding to reduce entry barriers and promote racial and economic diversity within the industry. Furthermore, lawmakers are currently working on solutions like SAFE Banking Act which has attracted 38 additional cosponsors in the Senate that would encourage banks to work with cannabis-related businesses; providing any nervous lenders the confidence they need to enter this new and developing sector.

Environmental Impact

As cannabis cultivation and consumption become more widespread across the nation, its environmental impacts should be taken into consideration. Unfortunately, many cannabis businesses must use cash-only transactions or use questionable loopholes to open basic bank accounts – making them targets of violent crime and leading to stigma against this emerging industry that must be overcome through banks partnering ethically with cannabis businesses.

Cannabis cultivation can be resource-intensive and create issues surrounding land-use changes, water usage, pesticide application and energy consumption. Robust agricultural research programs are essential in mitigating these effects and are the key to mitigating any detrimental outcomes from growing marijuana.

ICBA endorses federal legislation to create an effective safe harbor from federal banking sanctions for banks that choose to provide services to cannabis-related businesses (CRBs) where such activity is legal under state law. The SAFE Banking Act would prevent federal financial regulators from taking corrective supervisory action against a bank for providing banking services or lending real estate or equipment loans directly to these CRBs, or from imposing sanctions against loans designed specifically to serve these CRBs.