Beyond the Numbers: Should Your Bank Consider Banking Cannabis-Related Businesses?

Cannabis-related products and companies squarely live in a world of a perpetual gray area. To help clear up the opaque nature of banking by cannabis-related businesses on this episode of Weaver: Beyond the Numbers, host Shelby Skrhak sits down with Rachel Mondragon, Weaver Senior Manager in Regulatory Compliance specializing in financial institutions, to discuss.

The federal Controlled Substances Act makes marijuana a schedule 1 prohibited drug, plant and all, but recent legislation has given states new ability to delineate parts of marijuana, from medicinal CBD all the way to whole decriminalization. The legality of it is gray, so banks, credit card companies, and other financial institutions have kept their distance.

“Understandably, you have financial institutions thinking of banking this type of client but they’re obviously hesitating,” Mondragon said. “Part of that is lack of knowledge and understanding when we make a distinction between marijuana, THC, and CBD.”

But that’s left legitimate CBD businesses to make due as an all-cash organization, despite the industry’s rapid growth and proliferation across the United States. With many cannabis-related businesses needing banking and very few banks serving these customers, there’s an opportunity.

“For bankers that are looking at potentially banking this type of customer, there is profit to be made,” Mondragon said. “Financial institutions can’t deny that there are other financial institutions that have taken this leap, saying ‘These people have to bank somewhere. We’re going to go into this niche and we’re taking that risk.’ But it’s still a risk-based decision.”

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