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Where Do Dispensaries Keep Their Money?

Are you a dispensary business owner and wondering, “where do dispensaries keep their money“? Few business owners relish handling banking and finances. No one opens their dream store, only to spend endless days sitting in front of spreadsheets. But for cannabis dispensaries, it’s more than just a headache. It’s a serious security risk. In fact, access to financial services can be so difficult it raises a surprising question: where do dispensaries keep their money?

In the bank, right? Isn’t that where everyone keeps their money. In reality, the situation is vastly more complex and raises serious issues about the present state of cannabis banking.

Where Do Dispensaries Keep Their Money?

In this article, we’ll answer where do dispensaries keep their money, providing key tips on how dispensaries can best navigate the current banking landscape.

What is the current state of cannabis banking?

Almost every problem facing the growing cannabis industry is due to the federal and state level differences in legality. Because cannabis can be grown and sold legally in many states, the industry is thriving. However, because cannabis is illegal federally, big banks and other financial institutions are hesitant to open cannabis-related business accounts for fear of federal repercussions.

In fact, the situation is so dire that many dispensaries, forced into a cash-based economy, are hiring armored trucks and security guards to protect their money. In San Francisco, dispensaries are routinely robbed, leading to an uptick in arms and the installation of high-tech glass and security systems.

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The SAFE Banking Act, currently heading for a Senate Vote, may change all that. It aims to prevent federal banking regulators from penalizing financial institutions for associating with cannabis-related businesses. But until the law changes, many banks and credit unions will stay well away.

Nor has the federal government done much to help the circumstances. The Department of Justice, for example, is clear that violations of the law will be prosecuted. Though, they may ignore some of the violations of the Controlled Substances Act (CSA). Such statements do not mean immunity to prosecutions, however.

It’s a strange situation. But that is the situation. If banks or their employees service a cannabis dispensary, technically, it is a federally illegal act. Big banks just won’t take the chance – their hands are tied.

Where do dispensaries keep their money?

The better question is, where don’t dispensaries keep their money. No major bank or credit union in the nation services the cannabis industry. In their place, smaller community banks and credit unions have stepped up.

It’s not always an adequate replacement, however.

Such institutions often involve significantly more paperwork, stricter compliance controls, longer timeframes, and more. In the end, it impacts dispensaries’ bottom lines. But it’s better than being without banking.

According to the Financial Crimes Enforcement Network, 515 banks and 169 credit unions provide services to cannabis-related businesses in early 2021. It’s a major step forward.

Often, such institutions do so not to cash in on the booming industry but to serve underbanked businesses within their community. Safe Harbor Financial, for example, was founded to “provide cannabis businesses a secure place to bank and a meticulous process to assure funds legitimacy.” It’s successfully servicing its community with over 500 cannabis banking accounts and more than $8 billion processed since 2015.

But not all credit unions or banks are as friendly as Safe Harbor. Some won’t advertise their association with the cannabis business; despite providing account services. Meanwhile, many newer banks and financial institutions are just trying to cash in. Frequently, they lack the relevant expertise to handle cannabis-related accounts. That means inadequate regulatory compliance, which can lead to unwanted federal scrutiny.

Banking and taxation

If the current banking situation makes little sense, taxation is even more confusing. The federal government is in the curious position of taxing companies it deems illegal.

Despite not having access to regular banking services, the IRS still expects income tax payments. To do so, marijuana businesses use IRS Code 280E – the code for illegal drug trafficking. Moreover, dispensaries are often depositing tax payments in cash monthly at the state level. For example, in Salem, OR, dispensaries must deposit money into a heavily guarded bulletproof site.

Why is cannabis banking vital?

If you can open a cannabis bank account, you should. Here’s why:

Theft, as we’ve discussed, is the biggest risk to a cash-rich business. There’s a reason why people don’t sleep with cash under the mattress. Moreover, safes only store so much cash.

To dissuade would-be thieves means investing in costly security systems. Employing guards to protect assets further digs into profits, potentially increasing prices. It also makes previously routine financial tasks like paying taxes a logistical and legislative nightmare. Maintaining excellent bookkeeping is critical in such a situation – but opening a cannabis bank account is far easier.

How to open a cannabis bank account

Speak to other dispensaries and research online to find the best financial institutions near you. Look for banks and credit unions with a wealth of experience dealing with high-risk businesses.

  1. Always remain open and honest about your business. Never mislead a financial institution, as this can lead to account closure.
  2. Ensure you have all the relevant documentation available, including business and marijuana licenses, sales records, property deeds, inventory logs, and more.
  3. Check the fine print. You need to know the exact capacity and limits related to your account.
  4. Consider the fees. No high-risk bank accounts come without costs. Monthly account maintenance fees are only part of the picture. You must also account for additional fees like wires, payroll, online banking, etc.
  5. Apply for an application and open your account at Safe Harbor Financial.

Once you apply for an account, a physical site visit may be required. Your bank or credit union will ask to see all relevant documentation. You will also need to prove that every dollar going into the account is from a state-legal sale.

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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.

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