The cannabis industry has exploded into a multi-billion-dollar market with numerous growers and dispensaries. It’s expected to draw substantial investments in the upcoming years. Finding a bank where one can open a cannabis bank account is crucial.
However, the industry has been chronically underbanked due to strict government regulations, limiting banking options. Major banks rarely accept accounts from cannabis-related businesses, leading many to rely on smaller, localized marijuana banks and credit unions.
Yet, these smaller institutions need help due to the stringent regulations, resulting in closures due to compliance issues. Despite hundreds of US banks and credit unions serving cannabis businesses, many face shutdowns, leaving dispensaries and others in a tough spot.
When launching a business, whether in cannabis or any other field, a dedicated business bank account is a crucial step toward a strong start.
It ensures a clear separation between personal and business finances, facilitates effective financial management from the outset, and greatly enhances your business’s prospects for success.
At Safe Harbor Financial, we specialize in catering to cannabis businesses, understanding their unique requirements, and offering specialized business accounts tailored to cannabis-related businesses (CRBs).
Here are reasons why you should secure a cannabis business bank account.
Cannabis banking offers a dependable source of non-interest income, which is increasingly crucial as net interest margins decrease. Financial institutions should explore non-interest income avenues to bolster overall profitability.
Cannabis businesses actively seek reliable banking solutions and are willing to pay significantly higher fees, sometimes up to 10 times more than traditional business service charges.
Even without offsetting an earnings credit, charging substantially higher base account fees presents untapped opportunities for cash management fees.
Collectively, these fees have the potential to completely cover the operational costs associated with providing a program offering bank accounts for cannabis business.
Recent advancements in compliance technologies offer a dual advantage — they cut costs and facilitate remote banking.
While many banks currently allocate human resources to handle compliance for cannabis customers, emerging technologies provide automation, slashing the labor and expenses involved in the rigorous due diligence demanded by this industry.
Moreover, these innovative cannabis banking technologies facilitate contactless payments and seamlessly manage client applications, account underwriting, and risk assessment through remote, online processes.
In the long run, cannabis businesses with compliant bank accounts can enjoy a potential source of low-cost deposits. While the immediate push to expand and secure low-cost deposits might temporarily ease, it remains a crucial factor in ensuring sustained bank profitability.
Growing these deposits presently serves as a safeguard for future profitability, especially as the economy shows improvement. Staying committed to this expanding clientele prudently positions banks to capitalize on the financial benefits of an innovative industry and reap rewards for years to come.
Federal legalization of cannabis remains postponed for the time being — a welcome news to banks that open cannabis accounts.
Although some banks may prefer to hold off on offering financial services to this industry until federal legalization, there’s a considerable advantage for institutions that engage with this sector now.
Being an early mover presents opportunities to forge new customer relationships, generate increased fee income, and tap into new pools of low-cost deposits. These early initiatives could prove transformative once legalization eventually takes place.
Being a pioneer isn’t mandatory. If you’ve dabbled in retail operations within a community bank, you’d understand financial institutions’ hesitation about embracing something entirely new.
But here’s the exciting fact — even though the cannabis industry is still in its early stages, several financial institutions transitioned into banks that open cannabis accounts. They have been catering to cannabis businesses for quite some time and have successfully navigated compliance examinations.
Banks entering the industry now can benefit from the groundwork already laid out by these pioneering institutions, alleviating the need to start from square one when establishing their approach to serving cannabis-related businesses.
The landscape for cannabis-related banking is gradually improving despite initial hurdles. The passage and implementation of the Secure and Fair Enforcement Regulation (SAFER) Banking Act will become a game-changer.
This legislation aims to shield financial institutions from federal penalties associated with marijuana-related businesses, potentially opening up the market further as more banks allow cannabis bank accounts and capitalize on the industry’s growth.
However, it’s prudent to exercise caution when selecting cannabis-friendly banks. Work with institutions with ample experience and values compliance commitment, efficiency, and transparency.
Avoid untrustworthy or questionable banking options, as they’re not worth the potential complications or risks.
You understand the banking challenges as this emerging industry evolves if you operate a business involved in the legal sale of hemp, CBD, medical marijuana, or recreational cannabis.
For too long, businesses in this space have faced obstacles in securing essential business banking services due to the need for clear federal policy.
Need a cannabis bank account? We can help. At Safe Harbor Financial, we aim to alleviate those challenges and provide the financial backbone that growing cannabis companies need to thrive.
Since 2015, we have safely and securely processed over $8 billion in funds for clients engaged in state-compliant hemp, CBD, and marijuana operations.
Book an appointment with a designated Safe Harbor Financial banker today!
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