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How can cannabis businesses have more access to banks?

Cannabis is expected to be a booming business in California once the start date of January 1, 2018 rolls around. However, since it's difficult to secure a bank account for such a business, this can create significant problems for those involved. Here are a few ideas that might help solve this problem.

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Cannabis businesses and banking

After Proposition 64 passed, California Treasurer John Chiang created the Cannabis Banking Working Group (CBWG). After a series of meetings and speaking with many in the industry, the CBWG released a report outlining banking access strategies for cannabis-related businesses. 

Here are some of their strategies that may help cannabis-related businesses have more access to banks.

Solve the cash collection problem

Cannabis businesses must pay taxes, of course, and without access to banks, it can be a risky endeavor (picture a duffel bag full of cash). One solution may be to have local and state governments contract with an armored courier service to pick up cash and transport the money to secure counting and verifying facilities. This lessens the need for banks altogether, and may improve taxpayer compliance. 

Expand access to banking services under current law

Once January 1, 2018 rolls around, financial institutions will be able to follow the FinCEN guidelines so they can bank cannabis businesses. The CBWG recommends an online portal that aggregates data on cannabis businesses from local and state governments that will help banks comply with FinCEN's strict requirements. 

Explore a state-backed banking solution

While the lack of FDIC insurance may be an obstacle, there is no reason California can't explore a state bank (or state-backed bankers' bank) that can work either as a standalone option for cannabis businesses, or as a part of a larger banking system for underserved communities. 

Look into full access to banking

Another option is to allow cannabis businesses to be treated like other cash-intensive regulated industries, such as casinos and pawn shops, and provide full access to banking by removing federal restrictions.

Contact CCA today to discuss the individualized compliance programs we create for clients that offer financial institutions the level of due diligence necessary to make these important operational services available directly to cannabusinesses.

Monica Beyer