A lot of people are unaware that cannabis businesses still have a hard time finding banking solutions. Banks don’t want to work with these businesses because the federal government has not legalized marijuana yet. This means that there can be difficulty with finding cannabis banking solutions for your business.
Some banks will work with you, but there is usually a huge fee attached to it, and they might be limited in what services they offer you. Other than this, the only solution would most likely be cash-only, which can lead to security problems and make taxes difficult since cash cannot be tracked using software like Quickbooks or Quicken. So now that we know about our options let’s choose one that works best for you.
One important thing to keep in mind is that some businesses can open an account at their local credit unions. Many credit unions may not be aware cannabis is even legal, but you can email them or call and ask if they will work with your business. Some banks also do not know that cannabis is legal, so it’s always a good idea to contact them and let them know what you want from your banking experience.
Overcoming banking challenges in the cannabis industry
The biggest difficulty that cannabis businesses face is that while many states have legalized cannabis, the federal government has not. Banks that work with cannabis businesses might be penalized for working with a federally illegal business, leading to them closing your account. Cannabis businesses usually need banking services like checking accounts and credit cards, but finding these cannabis bankings solutions is difficult.
Some banks will work with you, but there is often a fee involved where they require you to pay a lot of money every month or quarter, depending on how much service the bank offers you.
You are in luck if you have an independent bank nearby because they tend to be more willing to work with cannabis business owners. However, even though some banks out there will welcome your business, most of them will require a large deposit, which can cause problems for many small-time pot farmers or retail shops.
Why the cash-only option is not the best one
Having a cash-only business is not ideal because it can be unsafe to have that much money in your store or farm all at once. You also can’t use software like Quickbooks or Quicken, which might make preparing taxes more difficult. The lack of cannabis bankings solutions means there are no credit card machines in most cannabis shops, so people who don’t have cash on them cannot buy the product.
Banking Options for Cannabis Businesses
Some banks you can try are independent small-town local banks and credit unions, but these usually require large deposits and fees depending on how they plan to help your business out. It may be better to explore other options before committing to one of these types of institutions though since
Industry owned banks
One of the best options would be using a bank run by the marijuana industry, which has no issue working with cannabis businesses. There are no issues involved because the bank’s people don’t care as long as they get paid. The only downside would be that their rates might be a little higher, but it is a great solution for those who want to keep their main bank accounts.
Get a payment solutions partner
There are many companies in the US today that offer cannabis banking solutions. These solutions can be wide-ranging, like setting up a merchant account for your business to use every day. This way, you can avoid cash or checks but keep your money in the bank. You should know that if you choose this option, it will likely require higher fees than normal banking services, and you need to make sure they are partnered with a bank that does not penalize them for accepting your money via credit card.
Another solution would be using an ATM owned by the marijuana industry. This is probably one of the best options because most people who walk into pot shops don’t carry a large amount of cash. Especially in rural areas where there aren’t any banks within 30 miles in every direction, having a good ATM in the shop is very convenient and adds safety. The only issue with this solution is that some ATMs charge up to $8 per transaction, which can be very high for small pot shops and growers who want to use the ATM but don’t want to pay that much money in fees everyday month or week.
If you are like most small-time retailers, having an advocate for your marijuana business that knows the industry inside and out is crucial. This person understands how to find banking solutions for your business without getting too technical with all the legal jargon. They also know who will give you the best rates possible and how to guide you through confusing processes like setting up merchant accounts or credit cards through shady companies. This can make a world of difference because even though there are great banking options out there, only someone who works in the industry every day will be able to help you choose one that offers everything another might not offer, at a price that won’t break your bank account.