Can Dispensaries Use Banks in the Cannabis Industry?

Can dispensaries use banks in the cannabis industry? Gone are the days of backstreet dealing; cannabis today is a multi-billion-dollar industry. Following legalization in many US states, Canada, South Africa, and Uruguay, sales of legal and medicinal cannabis are now a major source of tax revenue.

In fact, the US cannabis market is worth more than $20 billion annually – and globally, cannabis sales could reach $500 billion. Meaning cannabis banking in 2022 is radically different than even ten years ago.

Nor is the market changing anytime soon. More and more licenses are being granted in the US. And with the industry becoming standardized and commercialized, cannabis banking in 2022 is the big question on grower’s and seller’s lips.

Can Dispensaries Use Banks in the Cannabis Industry?

In short – can dispensaries use banks? And what’s the nature of marijuana banking – or even hemp banking – in the new world of legalized cannabis.

In this post, we’ll explain how dispensaries can use banks legally and provide some insider tips on modern marijuana banking.

Can dispensaries use banks?

Despite widespread legalization, there remains a hesitancy about cannabis’s role in society. It’s still got a slight air of taboo. Nowhere is that more present than in marijuana banking. Indeed, the whole cannabis banking industry in 2022 is rife with rumors and misconceptions.

Like any business, cannabis dispensaries receive cash and payments for their products. That money has to go somewhere. Dispensaries, therefore, commonly engage in marijuana banking. They deposit money, pay bills electronically, and even purchase stock using their bank accounts. However, it doesn’t work exactly like other industries.

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Difficulties arise in the US from the complexity of cannabis’s legal status. Though it is legal in many states, it’s still classified as an illegal drug federally.

In 2014, to manage the thriving marijuana banking industry, the US Treasury released regulatory guidance instructing banks on serving the cannabis industry. The banks were able to serve such businesses. However, a heavy compliance burden meant that doing so was often expensive or impractical.

In this way, cannabis-related businesses are similar to gambling, firearms, and adult entertainment, in contrast to the looser regulations of the alcohol industry.

What is cannabis banking?

Banks may not take a moral or political position on cannabis – but they do like making money. No financial industry is going to ignore a booming market sector.

In response to widespread legalization, cannabis banking in 2022 is easier than ever. Specialized accounts and banks now cater to the growing pool of growers and dispensaries. Nevertheless, as any dispensaries will tell you, no major banks currently service the marijuana industry.

The result is a small-scale cottage industry of banking institutions and credit unions. There are downsides, however: more paperwork, longer timeframes, and much stricter compliance controls.

Such difficulties in breaking into even the hemp banking world have generated a tumultuous marketplace. All too often, newer financial institutions collapse under the weight of hemp banking compliance issues – let alone dealing with cannabis. These banks are shut down, leaving growers and sellers scrambling to salvage their finances.

Speaking to other industry dispensary owners, accountants, and lawyers can help point out veritable and reliable financial organizations.

Safe Harbor Financial, for example, is a pioneer in Colorado’s flourishing marijuana banking industry. Created by Partner Colorado Credit Union, we’ve got over 90 years of financial expertise informing our decisions and advice. Just what you need when trying to run a reliable and profitable business.

It’s one of several hemp banking institutions popping up across the country, helping businesses navigate the complex financial landscape.

Marijuana banking isn’t an option; it’s essential

Why do businesses even need a bank account anyway? The answers might seem obvious. But with such stringent legislation governing cannabis banking in 2022, many companies aren’t asking whether dispensaries can use banks; they’re questioning if they even need one in the first place.

You need a bank account to run a successful business. The risks far outweigh the rewards associated with not having a bank account. Here’s why.

1. Cost. Not having a bank account essentially walls you off from storing your money digitally. Holding such large sums of physical cash means counting, logging, packaging, storing, and transporting paper money. That all costs – and it’s also a risk. Money can be damaged and destroyed – it’s why even the biggest drug lords bribed banks to accept their cash.
2. Theft. Cash attracts thieves like flies to honey. Storing large cash reserves on your premises makes your business a prime target for criminals. Robberies can severely damage not just a seller’s finances but also their reputation.
3. Accept digital payments. Fewer and fewer people are using cash as their primary means of payment. With the rise of online banking, ACH (automated clearing house) payments, like electronic payments and money transfers, are increasingly the payment method of choice for millions of consumers. Without a bank account, such payments are impossible.
4. Efficiency. When you’re paid, you want access to that money as soon as possible. Cannabis and hemp banking radically increase the operational efficiency of your business – and improve record-keeping, making it ideal for tax and legal compliance.
5. Planning. Attracting investment and growing your business means proving your profit stream. No one wants to invest in a risky enterprise. Through cannabis banking, you can provide a reliable estimate of your current and future profits.

Cannabis banking in 2022

To recap – can dispensaries use banks? In principle, yes; in practice, it’s often complicated. If you’re hunting for a bank or credit union to manage your money, be upfront about your business. Always read the fine print on the account, and know any costs involved.

Nevertheless, dispensaries can and should access financial services. Failing to do so is just too much of a risk.