The long and the short of it is the U.S. federal government remains set on classifying marijuana as a Schedule I drug, deeming it a high potential for abuse with no accepted medical use. It’s basically on the same boat as heroine. Yet, cocaine is classified as Schedule II, less abuse potential than Schedule I drugs. Go figure.
And so, since cannabis continues to be illegal under federal law, most banks are afraid to do business with cannabis companies because the federal government manages all US banks and credit unions. While no law states banks and credit unions can or cannot do business with marijuana companies, they still fear possible financial and/or criminal consequences for supporting cannabis businesses.
In the states where marijuana has been legalized for recreational and medicinal use, hundreds, if not thousands of cannabis-related businesses have opened or will start, and banking access remains their one big problem. And, since cannabis companies have nominal access to basic banking services – only about 1 in 30 banks and credit unions accept marijuana companies as a customer, it’s hard to obtain lines of credit, loans, or business checking accounts for cannabis business owners. Due to this, the cannabis industry is governed by cash which is a security worry and makes it difficult for a company to expand and grow its business.
This is a 2-part story. You can read part two – Why Banks Do Not Want To Work With Cannabis Companies – Part II: The SAFE Banking Act and the 2018 Farm Bill.