Local Banks, High Stakes: Banking for Licensed Cannabis Retailers

Licensed cannabis companies in the United States face significant challenges in working with regional banks for card transactions due to the legal complexities surrounding Cannabis. But that is starting to change as more and more states legalize Cannabis for both medical and recreational use, and legislation discussions regarding banking take place in the US Congress. There has not been a change in federal policy regarding the legalization. Still, there was federal decriminalization signed into law last year by President Biden, which wiped federal crimes from people’s records who were convicted of federal cannabis crimes.

Knowing which regional banks in your state or nationally will work with your licensed dispensary can be daunting. After all, there are hundreds, if not thousands, of regional banks with their stance on cannabis companies. Some have their hands tied in conservative states, but others in states where Cannabis has been legalized can work with you across state borders. But going bank by bank isn’t a working solution to find the best rates and cannabis expertise. Let’s see what is.

Working with Regional Banks is Cannabis’ Best Option

There are some obvious and some less-than-obvious reasons why regional banks are the best option for licensed cannabis stores.

1. Accessibility and Willingness to Serve: Regional banks and credit unions, especially those chartered by states, maybe more accessible and willing to work with licensed cannabis dispensaries. Despite federal restrictions, they are often more in tune with local regulations and may be more open to serving legal businesses at the state level. In contrast, national banks, which are typically larger and operate under the more direct scrutiny of federal regulators, tend to be more cautious and less willing to serve cannabis businesses to avoid potential legal risks.
2. Customized Services and Understanding Local Markets: Regional banks might offer more personalized service and a better understanding of the local market and regulatory environment. They may be more flexible and adaptive in meeting the specific needs of cannabis dispensaries, which can be advantageous for these businesses in navigating the complexities of the cannabis industry. If your particular county has a specific regulation, a large bank likely won’t know, and only a regional bank can provide that level of care and specific expertise.
3. Risk and Compliance Management: Regional banks might be more prepared to handle the enhanced due diligence required for working with cannabis-related businesses. They may have developed specific protocols to ensure compliance with state laws and regulations, crucial for mitigating legal and financial risks associated with the cannabis industry. You don’t want to get up and running for a cease and desist order to show up on the front door of your dispensary.
4. Banking Costs and Fees: The fees and costs associated with banking services may differ between regional and national banks. Due to the high risk and intensive regulatory compliance required, cannabis businesses might face higher banking costs depending on the institution. Regional banks might offer more competitive rates for local businesses, including cannabis dispensaries. Knowing which regional banks do not penalize cannabis companies is a bit of a minefield. Knowing who to work with requires talking to a lot of branches.
5. Availability of Services: The range of services available to cannabis businesses can differ between regional and national banks. While some regional banks might offer a full suite of services, including business accounts, credit lines, and payment processing, others might be limited in what they can provide. If they choose to serve this sector, national banks might offer more comprehensive services but with stricter compliance requirements, which could stifle growth.
6. Relationship Building: Building a strong relationship with a regional bank can benefit a cannabis dispensary, as these banks may offer more personalized customer service and a deeper understanding of the business’s needs and challenges. This can be particularly valuable in an industry that faces unique regulatory and operational challenges. National banks are known for canceling business accounts without warning or reasoning; business owners get a letter saying they have 90 days to move their accounts. This is common with large soulless national banks like Chase, where your “relationship” is meaningless to them.
7. Impact of Federal Regulations: Regardless of whether a cannabis dispensary works with a regional or national bank, the overarching federal regulations and the legal status of Cannabis at the federal level continue to impact banking relationships. This includes issues related to interstate commerce, anti-money laundering laws, and the Bank Secrecy Act.

Being careful and legally compliant is one of the most important aspects of running a successful cannabis operation. If you’re fined every quarter, it will be hard to make profits. The right bank will help ensure that regulations do not handcuff your business.

Cannabis Banking Relationship Building is Key

If you take anything away from this article, the biggie is that your relationship with your bank matters. This is even more important for Cannabis businesses that have different types of businesses than a traditional store. When credit card processing, debit card processing, business loans, and bookkeeping are not offered by large national banks, working with a regional bank and building a relationship will make it all possible.

In summary, for licensed cannabis dispensaries, working with regional banks as opposed to national banks can offer advantages in terms of accessibility, customized services, and potentially better risk management. However, the decision also involves considerations regarding the range of services, banking costs, and the ongoing impact of federal regulations.

Brother Processing has Relationships with USA Cannabis Friendly Banks.

Being involved in the Cannabis industry for over a decade, starting in Canada and now throughout the USA, makes us an expert on what Cannabis businesses require. We have worked with large and small businesses in the cannabis space and with larger and smaller regional banks that have worked with cannabis companies for several years. We have standing relationships with cannabis-focused banks ready to accept your business and help you get off the ground running with a full suite of banking for your cannabis business. For the best Cannabis Regional Bank Merchant Accounts, contact us and get the ball rolling today.