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Cannabis Cash Crisis: Where to go when banks say no?

Categories : Cash covers a broad range of transactions, Cash is a contingency and fall-back solution
March 12, 2019
Tags : Cannabis, Cash, Commercial bank
Cannabis is a booming business in the United States that garnered about $9 billion sales in 2017. Still viewed as illegal under federal law, business owners have limited access to banking.
Communication Team / Equipo de Comunicación

This post is also available in: Spanish

When the recent wave of marijuana legalization continued to hit more and more US states, cannabis business owners rejoiced at the decision that made their venture plans more viable. But this new-found liberty would only go so far with the federal government still considering marijuana illegal, thus limiting access to the banking system – even if 31 states including Washington D.C. legalized the drug for medical use and/or adult recreation.

Business owners selling licensed, well-regulated and taxed cannabis have been experiencing a difficult time opening a bank account despite the 2014 FinCEN guidelines allowing financial institutions to provide banking services under certain circumstances. Fast-forward to 2019 and financial services providers remain reluctant, thus leaving about 70% of thriving American marijuana businesses, growers and dispensaries with an empty and non-existent bank account.

While we wait for a positive banking relationship to unfold, the million dollar question to this $9 billion dollar industry banks dare not touch is: where does one go when they say no?

Retail cannabis shops that run as bank-less businesses rely entirely on cash that partakes in every step of the process. Since dispensaries are unable to accept debit or credit cards, customers often make their purchases in cash and if not, store-run internal ATMs. Store owners then typically use cash to pay their suppliers and employees – hailing cash as king throughout the entire supply chain.

We see how cash proves to be an efficient and reliable fallback payment instrument, but this is not to say that cash should be the sole form of payment option since dealing with cannabis is a risky business in itself – just imagine the fleet of cash-carrying, marijuana-filled armored vehicles it takes for a purchase to go through? In this context, the cash-only business does create operation and safety concerns but needless to say, it’s what’s keeping the pot boiling – no pun intended.

Today, there have been several efforts to change state and federal laws to permit access to banking facilities but in the meantime, cash presents itself as a resource ready to offer a helping hand amidst conflicting policies and paradoxical debates.

Cash has been the fallback solution for these entrepreneurs when banks close their doors– an absurdity considering the very real returns to the state (taxes) and the potential profit for banks.

This post is also available in: Spanish