Getting a bank account as a cannabis company has remained difficult with federal prohibition still in place, even as more states open the doors for medical and adult-use cannabis. But if you’re in the right state (and willing to go through the paperwork), opening an account is absolutely possible.
The key is complete transparency, which may seem counterintuitive. Banks and credit unions that service cannabis businesses are openly violating the Bank Secrecy Act, a federal crime, so it might seem like it would be a better idea to hide the nature of what you’re doing. However, that is exactly what will get your account closed or your bank in trouble.
Financial institutions must follow the 2014 FinCEN Guidelines if they want to service the cannabis industry. The Financial Crimes Enforcement Network details the oversight and accountability needed to offer those services to cannabis clients, and it takes a lot of reporting by the bank. That is why your bank needs complete financial transparency from you if you want to open a bank account.
Not all states have equal access to banking services, depending on the kind of regulations in place. Some states like New Mexico have a completely unregulated medical cannabis market, and in states like these, banking services are incredibly hard to come by. The regulations in many states don’t yet meet the high standards of the federal authorities for establishing oversight on the cannabis industry.
Stronger regulations means more access to financial institutions. States like Colorado, Washington, and Oregon require accountability for every cent and that owners undergo criminal and financial background checks. California is somewhere in the middle as its regulators continue to forge a path forward. The licensing rules are still too weak in the eyes of the federal authorities and financial institutions.
Don’t be discouraged if you’re in a state where it is harder to get an account. More and more financial institutions are opting to service cannabis clients every month.
Tips for getting a bank account
If you are in a state with sound regulations and in a position to open a bank account for a cannabis company, here’s what you need to do:
- Be completely transparent about your transactions. Hiding behind a generic “management firm” will not get you an account that you can keep for long, and it could get you in serious trouble.
- Provide all the documents that the bank requests, and do it with a smile. It may feel like they are asking for quite a lot, but it is the only way that a bank can fulfill its BSA obligations and follow the FinCEN guidelines. It’s not just the bankers trying to make your life miserable.
- Secure the bank account directly. A big red flag is using middlemen or management companies to secure accounts with financial institutions.
- Review the FinCEN guidelines so you can avoid other red flag activity.
You should expect that your bank will actively monitor your account, and that’s not just your financial transactions. That also includes your company’s social media accounts and verifying licenses.
Though it is difficult, it is possible to secure a bank account for your cannabis company in several states. Helping your bank follow the FinCEN guidelines and being transparent about what you’re doing will give you the best shot at making happen.