Although many states have legalized cannabis, it remains federally illegal in the U.S. It is also illegal for banks to handle cannabis revenue. This, of course, makes things complicated for cannabis entrepreneurs.
Large national banks generally comply with federal law and refrain from doing business with cannabis companies, unless the business is already extremely successful. Why? Well, the Banking Secrecy Act requires banks to report all transactions of over $10,000 in cash. Cannabis businesses often operate with cash transactions, so banks know that this requirement is probably in place to flag cannabis companies. Banks have to submit tons of paperwork to show that the large amounts of cash brought in by cannabis businesses are not a product of money laundering. As such, most large banks don't bother with the industry.
The good news is that more and more small, local banks are willing to work with cannabis businesses! So here are three tips if you're wanting to dive into the cannabis industry:
Research and develop relationships with banks willing to do business with a cannabis company
Follow laws and regulations to the letter
Don't hide the nature of your business! It can come back to bite you later!