Cannabis is legal in a majority of states but remains illegal at the federal level. This legislative divide creates uncertainties that dissuade most federally regulated banks from servicing the cannabis industry. With banking providers in short supply, cannabis businesses are struggling to earn and maintain the same access to financial services as their peers in traditional retail industries.
Some financial institutions have made the decision to bank cannabis businesses, though many of them have reported significant challenges in maintaining their services. Some of the industry’s banking providers have reversed their decision because of the category’s risk and ROI, and in these cases, banking providers are quick to close cannabis accounts. In these circumstances, their clients are left stranded and without support — a risk any business owner would want to avoid.
Given their limited options, an estimated 70% of cannabis businesses resort to cash-run operations. In my experience providing financial services for the cannabis industry, I’ve found that sometimes this decision is made under the misconception that it is a cheaper or safer alternative to opening a bank account. Yet, cash-run operations in the cannabis industry create financial and safety liabilities.
Storing cash on location is like placing a giant target on your storefront. During the unrest following the death of George Floyd, dispensaries across the nation lost millions of dollars to some of the chaos ensuing the protests. Large amounts of money on-site creates a safety risk not only for the employees and customers in the immediate transactions but for the entire community.