A consistent hurdle for California cannabis companies has been accessing the banking services typically available to other industries. This is due to the federal government’s prohibitive stance against marijuana. Without banking services, many cannabis companies must pay their employees and taxes in cash. This poses a security risk not only for the cannabis company, but to federal, state and local government agencies that are ill equipped to handle hundreds of thousands of dollars in cash.
Recently, this situation has opened up slightly when the California Cannabis Industry Association stated that the North Bay Credit Union will provide checking, wire transfers and other banking services to its members. The partnership between the California Cannabis Industry Association and the credit union provides an outlet for organizations in the state to more securely manage their finances. It’s also indicative of a growing trend of state financial institutions willing to work with California cannabis companies.
Even though North Bay Credit Union has worked with cannabis companies since 2017, A.B. 1525 was a California law passed in 2020 which has helped establish greater safeguards for the marijuana industry and gave cannabis operators more banking options. Creating a sentiment that more financial institutions may open their doors to the industry in the future – and allow organizations to focus on their core business.
In late 2020, there was a reported 677 banks and credit unions that were providing services to marijuana companies nationwide. And this number has dwindled slightly because of the COVID-19 pandemic. With attempts to improve the banking situation for the cannabis industry hitting an impasse in Congress.
This is best exemplified by a bill in the House designed to allow cannabis businesses to access loans, lines of credit and other banking services under state laws, and protecting financial institutions from prosecution for handling marijuana-linked money. This bill was stopped in the Senate.
While President Joe Biden was once a staunch supporter of the War on Drugs, he has softened his position. Stating he would decriminalize it, expunge prior use convictions, and end jail time for those incarcerated for use alone. Leading to optimism for those in the industry that regulatory gains will be made in the near future.
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February 09, 2021
