For decades, the United States has been contending with its relationship with drugs of all kinds. One of the more controversial topics of late has been the burgeoning cannabis industry.
Beginning in the 1990s, some states began to introduce laws legalizing cannabis for medical use, and in 2012 Colorado and Washington were the first states to legalize it for recreational use. Today, 18 states, Washington D.C., and Guam have joined the legal marijuana movement. Most people believe that the tides are continuing to turn to national legalization sometime in the next decade.
While states are legalizing cannabis, it’s still illegal on a federal level. Because of that fact, there are currently no large banking institutions or credit card companies in the United States willing to service the cannabis industry. This is a natural complication of the different state and federal laws. So what is a cannabis business owner to do in this case?
Fortunately, community banks and credit unions are opening their doors to cannabis entrepreneurs. Offering banking services to dispensaries and growers is good business. It’s clear that the cannabis industry will continue to grow over the next several decades, and expanding industries are great for the banking business. But, banks are also ideally positioned to help cannabis businesses operate safely.
Because major credit card companies won’t process payments for purchases at marijuana dispensaries, most establishments require cash-only payments. Cash-only businesses without bank accounts store large amounts of cash on-site, making them vulnerable to theft. While some cannabis businesses spend extra money to hire security guards to protect their establishments, wise business owners store their money in accounts at community banks or credit unions.
If federal legalization happens in the coming years, as many people expect, there will be seemingly endless expansion opportunities for cannabis businesses. To qualify for business loans, find investors, or even sell their companies, cannabis business owners will need good financial records. It’s much easier to maintain good records with a bank account than strictly cash business. Tidier bookkeeping also leads to better records for tax and compliance purposes.
Some people may sit back and imagine that the people in the cannabis industry are wild, lazy, stoner types, but that couldn’t be further from the truth. In 2021, they raked in $22 billion, even more than the wine industry in the United States. These are serious, savvy entrepreneurs, and they deserve a secure banking relationship as much as any other client on our books.
Working with the cannabis industry is another way among many that community banks are leading the way for our largest competitors. Surety Bank has been working with this industry for a number of years, now. Our size affords us agility and enables us to meet the ever-evolving needs of our clientele. For more information about the services offered at Surety Bank, contact our office.
.png){kind=small}
