Despite cannabis being legal in this state and many others, there remain many obstacles the industry must deal with that most everyday businesses take for granted. One of the most difficult roadblocks to legitimacy is banking.
Because cannabis is illegal under federal law, it can be incredibly difficult and cumbersome for cannabis businesses to gain access to financial services. These include checking and saving accounts, lines of credit, insurance, and loans. Most banks are unwilling to cross the imaginary line into dealing with “illegal” businesses, for fear of federal repercussions.
Additionally, these restrictions force most cannabis businesses to operate largely in cash, which creates a significant safety risk. Legitimate businesses must travel with large sums of cash in order to make their tax payments.
They also have no alternative but to keep an exorbitant amount of cash onsite, which forces companies to employ overnight, sometimes armed, security. Even with the added security, break-ins and threats of violence always hang over these businesses.
While the current administration's recommendation to deschedule cannabis is a start, it does not alleviate the uncertainty of banking with the cannabis industry. One proposal that is making its way through Congress with bi-partisan support is the SAFER Banking Act.
This act would prohibit federal regulators from penalizing financial institutions that offer banking for cannabis businesses, and help to clarify existing laws to provide common sense protections for these accounts. Passage would also go a long way in promoting public safety, tax collection, and transparency, which would further legitimize the industry in the public eye.
The validity of the Cannabis industry has come a long way over the years. But, until the federal government gets on board with easing obstacles such as banking, the unjust perception of legal cannabis and the industry as a whole will continue.
By Stephen Freedman
Stephen Freedman is the Regional Manager of the ERBA Markets, the WOODS, West LA, Venice, Culver City, and WeHo.
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