marijuana bank accounts
marijuana bank accounts

How Do You Get a Marijuana Bank Account Opened?

Cannabis bank accounts are tricky, but doable if you follow the rules

Posted by:
DanaSmith on Thursday Oct 12, 2017

What You Need To Know Before Opening A Bank Account



Data from the Associated Press tells us that there are now more than 300 banks and credit unions in the United States transact with cannabusinesses. With over half the country’s states operating with a legal cannabis law in one form or another, there are more cannabis businesses than ever and more in conception every day as people see how lucrative it is to provide this medicine to people in need.


Despite the prevalence of medical cannabis, many business owners and wannabe business owners still don’t fully understand what it entails to open a bank account. With over 700% of cannabis businesses operating without a bank account, it’s clear that this is a problem that needs to be addressed. Additionally, even with the serious income that cannabis businesses are capable of generating, there are still legal issues that need to be faced. But even if there are restrictions, finally more financial institutions are now offering services to cannabis businesses as long as they meet certain requirements. After all, there’s money to be made by the banks too.


There are legal risks to take for any cannabis business owner who will open a bank account, so it requires careful thought and consideration. Most importantly, doing the homework on your part will save you the headaches later on.


Here’s what you need to know about opening a bank account for your cannabis business:


Legal Aspects


State laws continue on cannabis are constantly changing to keep up with the changing perceptions of the plant. Regardless, cannabis still remains a Schedule 1 drug on the federal level and because of this, banks don’t have as much leeway, and many prefer not to, transact with businesses that touch the plant. However, in some states where cannabis is legal in some form, banks have policies in place that enable them to accept cash from cannabusinesses.


When you open a business account, you will need to prove that your business is legal, that you are insured and licensed, that your employees receive adequate training, and that you are compliant. Financial institutions are legally obliged to report your account if any illegal activity is suspected, and any investigations that may ensue will cost you time and money. There is also a risk that your business may be interrupted.


Personal Accounts = No No


For business owners who have been moonlighting with a small cannabis business on the side, you’ve probably been using your personal bank account to handle the business money. However, if you’re planning to expand and deal with much more money, you’ll have to rethink the way you handle the cash. Keep in mind that a personal bank account can be scrutinized in the same way a business account would. If a bank suspects illegal activity with your personal bank account, they can still report you. 


Application Requirements


Running a cannabis business means that you’re faced with several restrictions, and opening a bank account is no different. Financial institutions will ask for several documents to process your application for a bank account. If your business is involved with the cultivation, sale, or processing of cannabis, these are likely the documents that a bank will ask for on top of the standard banking docs:


  • Information about the company and ownership details
  • Thorough explanation of the business and operations
  • Permit, state, county, and city licensing information
  • Compliance documentation
  • Validation or deposit information


Compliance and Regulatory Requirements


You’ll need to develop a compliance program to meet the reporting requirements of a bank. Some of these requirements include:




These are just some of the regulations that cannabis businesses will need to comply with to open a bank account. Additionally, you’ll also need to ensure that your internal processes are capable of supporting risk assessments, remediation, readiness reviews, control assessments, transaction testing, and more. Regulatory inspections will be done on a continuous basis.


Continuous Compliance Training


Cannabis business owners should expect that the operations will be routinely screened by different regulatory bodies. It’s necessary to be a step ahead when it comes to compliance training and do your due diligence.


To make sure that both operational and management teams are competent to comply with the financial programs set in place, providing your team with continuing education is considered a best practice. Continuing education isn’t mandatory but eventually it could be, so as early as now best to be prepared.


Tax Compliance


Cannabis businesses are a potential C corporation, which means that you’ll need to file certain documents for federal taxes:



State, county, and city tax requirements will differ so best to check with your local authorities.




Cash Management Supply Chain


Major credit card vendors still don’t permit cannabis businesses to transact on a credit card or PIN-debit card basis. Your business will probably need to establish a cash management supply chain to effectively handle cash for sales and other purposes.


A cash management supply chain will require documented procedures that are also compliant with federal, state, county, and city requirements. You’ll also need to look for secure vendors who can help you with cash management tasks.


Watch Industry Trends


If you’re considering opening a bank account for your cannabis business, it’s critical to monitor both federal and industry trends on a regular basis. The industry is so dynamic that the laws today could easily change tomorrow.


No matter how you put it, as long as cannabis remains a Schedule 1 drug federally, opening a bank account for a cannabusiness is going to be risky. Cannabis business accounts have shut down in the past without warning, and as of now we have no reason to think that it won’t happen again in the future. Do your research and contact a lawyer if needed to ensure that your cash is safe.












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