We often hear the issues and challenges related to cannabis banking. In your experience, is this still a major issue for cannabis companies?
Tahir Johnson | CEO | Simply Pure Trenton
“Banking is still a major issue for cannabis companies. Although it is more common for cannabis businesses to have access to deposit accounts these days, they have much higher fees and typically offer less robust features and benefits than traditional bank accounts. Lending and access to capital, which is a cornerstone of banking services, are still out of reach for most cannabis businesses and those who are able to access lending are subject to higher rates. The passage of the SAFER Banking Act would provide much needed support for the industry.”
George Fernandez | CEO | Modern Canna
“Absolutely. Federal regulations still deter financial institutions from offering services to the industry. With limited access to banking services, loans and credit, cannabis companies must be well capitalized through private markets to effectively scale operations. Moving cannabis to Schedule III won’t completely resolve the banking issues, but it should improve the current landscape for operators and could lead to increased support from Congress on broader cannabis-related matters.”
Steve Levine | Partner | Husch Blackwell
“Of course, it is still a major issue. Limited financial institutions are willing to bank the industry, credit cards are not available and there is no real access to market rate lines of credit or other lending opportunities (except for hard money lenders).”
Sarah Lee Gossett Parrish | Founder and President | Sarah Lee Gossett Parrish PLLC
“In my experience, the former challenges related to cannabis banking are now mitigated by the availability of banking and other financial services offered by banks in my home state of Oklahoma and nationally by Safe Harbor Financial. While I still would like to see SAFE Banking pass for obvious reasons, fortunately cannabis businesses currently have a limited but high-quality menu of excellent options as far as banking and other financial services are concerned. Of course, there are other issues that arise and are tangentially related to banking, which SAFE Banking would likely address. However, the former challenges related to cannabis banking now pose much fewer barriers for legitimate cannabis businesses than in the past.”
Payton Shubrick | CEO | 6 Brick’s
“Yes, there are still significant issues with banking that impact not only cannabis businesses but also customers. The fact that a banking institution is federally insured means it can’t host cannabis accounts and limits the options available, and the actual process of setting up these accounts requires a lot of paperwork and time, which is often an obstacle for cannabis entrepreneurs. It should be noted that once the account is open, you often have a monthly maintenance fee that further creates struggles, especially when pre-operational. Additionally, from a consumer perspective, understanding the fee structure when using a debt-pin solution and how their bank may treat the withdrawal of funds is not always clear to customers. Lastly, with Mastercard most recently taking a firm stance against cannabis companies, cannabis companies must continue to be agile in the forever-changing environment.”
Keya Denner | Partner | Constangy, Brooks, Smith & Prophete
“Yes, however, the pending decision to reclassify cannabis to Schedule III could help cannabis companies while cannabis banking legislation continues to move through Congress. Reclassification will result in the removal of the Internal Revenue Code 280E tax burden on cannabis businesses because they will now be allowed to deduct ordinary business expenses. While reclassification will not remove strict regulations applicable to financial institutions when dealing with cannabis companies, reclassification will probably increase the chances that proposed legislation like the Secure and Fair Enforcement Regulation Banking Act (SAFER) Banking Act will eventually become law.”