8 Steps for Marijuana Business to secure Banking
If you own or plan to own a cannabis-related business, it’s important to know that getting financial support from a majority of banks will be difficult to do, but there are resources to help. We’ve put together a comprehensive checklist for things to consider when trying to set up banking for your cannabusiness.
The United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued guidance , in 2014, for financial institutions on this matter. Their goal was to clarify the expectations of the Bank Secrecy Act in light of recent state initiatives to legalize marijuana.
Cannabis related business owners can get a good idea of what they need to do in order to give themselves the best chance of receiving financial support from these institutions, by simply looking at FinCEN’s guidelines for financial institutions.
Below are some things to keep in mind:
Have you submitted an application and supporting documents for a state license?
It is imperative that you obtain the proper state license to operate your business if you plan to receive any financial support. Financial institutions want to be sure that you are operating legally, otherwise they could face consequences for funding your business.
Are you duly licensed through the local authorities?
Local jurisdictions require further licensing or have restrictions on cannabis-related businesses altogether. Be sure that you are legally allowed to operate locally and licensed if needed, in addition to having your state license.
Have you properly vetted other parties you do business with?
Make sure that, if you are doing business with other cannabis-related parties, you vet them to make sure they are properly licensed and documented as well. Any affiliation with and improperly maintained or unlicensed third party could reflect poorly on you.
Have you properly vetted your employees?
In a similar matter to vetting any businesses you associate with, you will want to ensure that your employees have no prior criminal records, especially those relating to illegal drug trafficking or money laundering.
Do you have a policy in place for the products you will sell and customers you will serve?
Thoroughly documenting the type of business you do is important, because there are big differences depending on whether you sell or produce medical marijuana as opposed to recreational marijuana. Make sure you have a way to keep track of everything your business does.
Do you have a good understanding of your business’ reputation?
In order to stay in compliance with authorities on a state or local level be sure to stay on top of current rulings and regulations.
Can you demonstrate a legitimate source of significant outside investments?
Regardless if a business is marijuana-related or not, this is something all businesses should do. If other institutions or investors have faith in your business, financial institutions are more open to providing financial support.
Due to the Bank Secrecy Act, Failing to follow any of these guidelines might result in worse than just losing financial support. It may be the financial institution’s responsibility to report you and your business, depending on the severity, which can result in being shut down and possible legal ramifications.
It is your responsibility to be diligent and transparent about your business’ operations if you wish to obtain or continue receiving financial support from an institution. Please don’t hesitate to contact us if you have any questions.