Despite proposed legislation that would enable national banks and financial institutions to transact with state-licensed cannabis operators without losing their national charters, a change in the law, “is not necessarily on the front burner anymore,” explained Carly Berard, senior council for the Illinois Bankers Association, during an August 18 Grown In webinar, “The State of Banking of Cannabis”.
Moderated by Grown In’s Mike Fourcher, the panel focused on how existing and upcoming cannabis operators should manage relationships with state-sanctioned financial institutions willing to bank companies that explicitly violate federal law.
“Find a cannabis-friendly institution that will work directly with you,” said Stacy Litke, director of banking compliance oversight at North Haven, Conn.-based Green Check Verified, which advises financial institutions on banking solutions.
“Many bankers are conservative and risk-based, and have this image of a cannabis shop being like something from a Cheech and Chong movie,” Litke said. “Invite them into your institution to show them how you run your business and how yo u treat your community.”
Berard said cannabis businesses that adhered to guidance issued by the Federal Deposit Insurance Corporation (FDIC) in its February 2020 Conducting Business with Banks report makes them “much more attractive to cannabis bankers.”
When choosing a bank,the panelists said operators should account for multiple variables including monthly charges, if the bank is a lender and if so what it is willing to accept as collateral, as well as other unexpected costs.
“There are a lot of sketchy players out there,” said Litke, who cited an example of a bank that advertised itself as having the lowest monthly cost but charged businesses $2,500 for every wire transaction made. “It’s better to pay $1,000 per month and $25 per wire.”
Cannabis companies looking for information about banking providers can consult their states’ cannabis control boards, their accountants and industry media and trade organizations,” said Litke.
Beyond what is publicly available, Bernard noted that “there are banks that don’t want to advertise” that they serve cannabis companies due to reputational risk and potential concerns from other clients. “Go through an intermediary who can go to the bank to see if they can take on more customers.”