While legal cannabis-related businesses (CRBs) have experienced unprecedented growth over the past few years – forecasted to be a $30 billion industry by 2025 – they have also faced a wide range of obstacles that has made doing business a challenge.
While cannabis is legal in many states, it is still illegal on a federal level, which means that banks, financial institutions, credit card companies, payment processors and other companies often refuse to work with them at all, due to the regulatory risks involved.
According to a recent article in PaymentsJournal, “Large financial institutions in particular have too much at stake to risk getting involved, as federally regulated financial institutions could be penalized for working with cannabis companies due to the Controlled Substance Act.”
This has caused two significant hurdles to CRBs, such as cannabis dispensaries, cultivators, testing labs, wholesalers, armored car services, lighting companies and CBD/hemp businesses:
- They tend to be significantly underbanked, leaving them unable to access even basic financial services such as checking accounts and electronic banking services.
- They often have to operate as cash-only businesses which is inconvenient to customers, expensive and inefficient for operations and potentially dangerous. Cash-heavy businesses are often targeted by criminals.
Fortunately, there are financial companies that are working to come up with viable solutions for CRBs to help them overcome those hurdles. Additionally, the SAFE Banking Act, which passed the U.S. House of Representatives in May 2020, opens the opportunity for banks to serve cannabis-related business. The Act specifically prohibits federal banking regulators from penalizing banks who service the needs of cannabis-related business. However, the bill is yet to be passed by the U.S. Senate.
Valley believes that every business should have the opportunity to take advantage of banking services to support their business. That’s why we’ve evaluated the risks and have opened the door to having conversations with cannabis-related businesses about helping them with their banking needs.
Advantages of working with Valley include:
- We’re a nationally chartered bank, and can grow with you as your business grows, doing business in multiple states.
- We offer a seamless, integrated platform for deposit transaction monitoring and movement of funds.
- We arrange for secure cash transportation on behalf of our clients who contract directly with our preferred cash transport service partner.
- We offer the convenience of online and mobile banking.
- We provide treasury solutions designed to help increase productivity, optimize cash flow, and drive profitability.
- And finally, we have a dedicated CRB Banking Team of experts who understand your specific banking needs and challenges.