The rapid growth of the legal cannabis industry has unfortunately been riddled with significant barriers to getting the necessary financing and banking solutions for hemp businesses. Despite the staggering worth of the legal marijuana market, which was $16 billion in 2020, very few banks in the US are willing to work with cannabis-related businesses.
Fortunately, there are many companies that specialize in cannabis industry banking solutions that help business owners effectively manage their finances and ensure compliance. These companies typically combine HR and banking solutions into an integrated package carefully designed to meet the needs of the cannabis industry.
In this article, we will discuss the unique banking challenges in the marijuana industry and how you may overcome them.
One of the biggest issues marijuana companies face is definitely the unwillingness of the majority of US banks to work with clients from the cannabis industry. For instance, the latest Financial Crimes Network (FinCEN) report shows that no more than 700 credit unions and banks serviced cannabis-related businesses in 2020. This is unfortunate, as these companies face a variety of dangers and risks as a result of being underbanked and having to operate in cash.
To combat this, The Secure and Fair Enforcement (SAFE) Act was proposed in September of 2019 with the aim of forbidding regulators from taking legal action against bankers for working with cannabis-related businesses. This act can give cannabis-related businesses access to more and better financial service providers and help them secure bank accounts, loans and credit cards.
Legal marijuana-related companies can create bank accounts with one of the 700 banks willing to work with them. These banks enable their cannabis clients to accept credit and debit card payments. However, in order to be able to open a bank account, your marijuana business needs to have highly established compliance and financial measures and be able to provide in-depth records to the bank.
In general, there is about 1 bank willing to work with cannabis-related businesses in each state, but the playing field isn’t even across the nation. For instance, states such as Washington, Colorado, Oregon and Nevada, which have generally been canna-friendly, tend to have more small banks that accept cannabis clients. States such as Illinois, Minnesota, Florida, New York, and Massachusetts also support safe banking through robust regulations.
The banking options for cannabis clients are fewer in states such as New Mexico, Arizona, and California, unfortunately. This is because many banks simply do not want to risk federal punishment, which makes them reluctant to work with marijuana clients. In addition, banks also need to pay extra fees not necessary in other industries, as well as fill out extensive paperwork to comply with FinCEN guidelines.
At Green Leaf Payroll & Business Solutions, we provide custom banking solutions to clients in the cannabis industry and other high-risk industries. Not only can we help you obtain the bank accounts you need, but we can also help you meet BSA and AML requirements and provide you with expertise-based advice for overcoming the unique challenges cannabis businesses face.
By investing in transparent, flexible, and customizable solutions to managing your finances, you’ll be able to minimize risks and facilitate growth. We combine innovative technology with a hands-on approach to help make your business thrive. What’s more, you can also depend on us for stress-free payroll and human resources consulting services across the nation.
Reach out to Green Leaf Business Solutions now and discover the best solutions to your banking troubles.