When Banking Services Become Officially Available for Weed Industry

Posted 4 years ago

We have a prospective industry, we have a profitable market but we have no sources for official financing. The situation seems comical, but this is exactly what happens with the cannabis business today. Afraid of breaking the law, banking institutions refuse to serve any kind of marijuana-related activity as the drug remains illegal at the federal level. Our experts tried to answer is there any way out from its vicious circle.

Barred from traditional banking services, cannabis companies face numerous financial challenges. The SAFE Banking Act was firstly introduced in March 2019, but now, after almost 5 months, the bill is still under discussion. How can you comment on this situation and what are the prospects of cannabis financial issue?

I believe that Congress is making a huge mistake not allowing licensed and regulated cannabis companies banking options.  There are hundreds of companies that are actually regulated that are not able to accept credit card payments, pay their employees, etc.  Then on another note, you have the IRS that wants these same companies to write checks (hold on, that they aren't allowed to have right now) to pay their taxes.  I'm not a politician, I speak for "The People" when I say "that's ludicrous and quite frankly, idiotic!" Congress is placing human lives in danger and actually, in my opinion also catering to the black market by not allowing for SAFE Banking.  Whether cannabis is federally illegal or not, we "The American People" have spoken and voted for what we want and unfortunately, our government seems to be taking a "communist" and irresponsible stand on the issue.  Their actions, or the lack thereof, has criminals and fraudsters crawling out of the wood-works offering these businesses fraudulent banking and credit card options and disguising them as being legitimate.  It's hurting businesses and the people who run them! I'm no financial advisor or broker, nor am I an attorney, but even Stevie Wonder can see the writing on the wall and at the end of the day "We the People" have spoken and we will get our way! Mark my words.

The bipartisan SAFE Banking Act has 206 co-sponsors in Congress and has cleared committees, waiting now to be voted on in the House. With cannabis currently legal either medicinally and/or recreationally in 33 states, it seems inevitable that laws will change at the federal level to bring the nation more in line with states. Recently, a number of businesses have sprung up in many states, to help with financing in the cannabis industry, which has eased the situation to some degree. However, the removal of penalties for the providing of banking services would very much improve the situation – not least in terms of safety issues associated with cash-only transactions.

I'm not a politician or lobbyist, so I won't try to make predictions about the SAFE Banking Act or any other currently under consideration. I do know that the lack of access to traditional banking and financing, coupled with the 280E taxation issue, are extremely serious concerns for plant-touching and ancillary cannabis companies. Everyone at every level will win big, from having access to traditional banking institutions in the fullest format, and I am a strong supporter of that new normal.

The OECD nations and many more, have issued what I call a "social license" and the strong data suggest lots of medical benefits to society. It is merely a matter of time,  a few years before the federal legalization occurs at the USA level. The states are moving faster and many multi-state operators have no problem in alternative finance models. Fintech partially addresses this federal barrier and Canada has figured out a way for banks to have commercial relationships without jeopardizing their US correspondent banking relationships. Prospects are very good - the social license and public opinions ultimately drive the willingness to pass laws. John Boehner, staunch Republican, is now on the board of Acreage Holdings.

Although experts have commented on the situation differently, they share the same views — banking reform should happen and the sooner the better. Stay with Infused to follow cannabis financing situation and not only. We collect the best expert advice on the most pressing issue in the marijuana industry!