Banking is complicated for cannabis-related businesses. Because of the legal status at the federal level, big banks and other financial institutions will not provide cannabis-related businesses bank accounts. This bizarre situation where million-dollar companies cannot access financial services has led to some odd stories. For example, legal marijuana companies paid $4.7 billion in taxes in 2017 – all in cash.
Access to financial services has improved in the years since. New smaller yet bespoke financial institutions – like Safe Harbor – have opened to fill the gap in the market. We offer cannabis businesses the chance to open a bank account and become financially stable.
Apply for a cannabis banking account or cannabis business loan with Safe Harbor Financial!
Still, it’s not as easy as it is for traditional businesses. With the cannabis industry viewed as high risk, you’ll need to jump through plenty of hoops to create a dispensary bank account. Below we’ll discuss the cannabis banking tips to help you get a dispensary bank account.
You cannot fool financial institutions. No bank will grant you a bank account without doing their due diligence. Nor can you open a bank account with a bigger financial institution without disclosing what it’s for. They will find out, and your account will be closed – you’re also at risk of fraud.
It’s important to disclose information like past bankruptcies – they can impact your risk for loans. However, you will still be able to open and establish a bank account at certain institutions.
This is one of the cannabis banking tips you can’t ignore.
Licenses. Permits. EINs. You’ll need all of your documentation ready to go. However, it’s more than just licenses – though these are critical. It’s also your sales records and inventory logs. As part of their due diligence, banks will want to know how much money is likely to flow into the account. They also want to see the source of such funds. After all, such institutions cannot risk federal prosecution.
It should be obvious. Legal cannabis retail is already a risky business. You cannot afford to engage in any dodgy or off-the-books activities. But this isn’t just about your business; it’s also about the bank or financial institution with whom you choose to go. All banking practices must comply with the Financial Crimes Enforcement Network’s guidelines. You should never go with an institution offering workarounds for legislation or regulations. It’s a major red flag.
Perhaps one of the best cannabis banking tips is just to be realistic. You will get a bank account eventually – just be conscious of the difficulties you may face. At the federal level, enforcement of the laws surrounding cannabis banking routinely changes in its stringency. You’ll need to be prepared for every part of the process and have everything 100% in order. You do not want to be rejected for something you could have solved weeks before.
Never try to hide any prior financial history or aspects of the business. The more you hide, the shadier your business will look. Rather, if a financial institution asks for information, have it ready to go. All the information should be clear and well-documented. And you should be upfront in the first interview about any financial issues. Transparency leads on from honesty. Remember – the less you hide, the more upstanding and reliable your business appears to banks and other financial institutions.
Federal authorities have a complex relationship with the legal cannabis industry. But your state regulations are the best place to start to ensure you are 100% operating legally; after all, they’re the entity that considers your business legal.
In fact, your bank is likely to ask for an on-site visit before the bank account is opened. So, ensure everything is in-line with what’s expected.
Sounds a little fanatical? You can never be too careful in the cannabis industry. It’s not just about maintaining solid books; they need to be bulletproof. Another aspect you’ll want to track is your inventory. Tracking your product from the moment it’s ordered to the moment it’s sold is a critical sign of a well-managed business. It also helps keep the business running significantly smoother – as you can monitor for upticks in demand.
Every business needs funding to get started. The premises, staff, and equipment don’t pay for themselves. Where did the money come from? Was it crowdfunded? Borrowed from friends and family? A private investor? Wherever your funding came from, always be able to show the paper trail.
It’s also true going forwards. For large initial deposits, you’ll need to demonstrate where those funds came from – be it online sales or in-store.
Your social media is your brand. It tells your customers who you are and what you’re about. But it also tells prospective banks and other financial institutions what kind of business you are too. You want your online business profiles, website, and social media accounts to function well and to reflect your company’s values. Banks know you’re a cannabis business; they really want to know if you are a reputable business.
Naming your business ‘Cannabis ‘R Us’ may seem like a brilliant idea… but it can impact your chance of opening an account. This is a cannabis banking tip you won’t often hear said. You want to avoid direct references to cannabis, weed, marijuana, high, etc., because they can raise the attention of the federal regulators.
Of course, you still need to brand accordingly. But just do so with a little sense of the current legal and regulatory landscape. It’ll be better for your business long-term.
Do you own a hemp, CBD, dispensary, marijuana, or cannabis business and need a business bank account? We’ve validated over $8 billion dollars in cannabis-related funds since 2015. Bank with confidence. Bank with Safe Harbor Financial today.
Open Your Account