Okay, so there is no central bank doing business with cannabis, but that doesn't mean it is
the end of our search.
Your best course of action is to have you are
looking into, though I will be honest and just let you know your best luck is
at a credit union. When setting appointments or speaking with someone live,
always be honest about what your company does, really does.
The banking question eventually (usually)
turns into ... "Can I just open a bank account and not tell them I am in
cannabis?" While you may be able to obtain a bank account through omission
or outright lying, we advise you do not do this. Eventually, your clandestine
account will be shutdown, and it usually happens at the absolute worst possible
time. Note that the shutting down of your bank account may also include a
temporary freezing of the funds in the account which can devastate already cash
strapped businesses.
Steps to get a cannabis bank account
Route 1
Ask around to others in the industry in your
State. In Oregon, for instance MAPS Credit Union and Salal Credit Union both do direct, transparent banking business
with the cannabis industry. This varies greatly state by state, so getting
recommendations from others in your position is always the best starting point.
If you can find "friendly banks/credit
unions", call first and set an appointment and ask them what documents
need to be provided, which applications should be completed, etc.
When you show up and apply, you must show up
looking and acting the part of a business owner, with all documents and
applications completed fully and correctly. Sound like a stupid point to make?
Of course you will do that right?! From my experience, wrong! People quite
often go the lazy approach and put the onus on the bank to let them know how to
do something.
Let me tell you, you are not the only person
looking to get that cannabis account. You are not a beautiful snowflake to
them, your business being social conscious doesn't matter, and quite frankly
they likely have a large backlog of applicants to go through and approve/deny.
If there are 10 other companies who did everything perfect and then there is
you with half the documents completed, you are absolutely guaranteed to be
pushed to the bottom of the list. With waiting times, that could extend your wait
time by months.
Ensure you understand the fees being charged,
and what information you will be required to provide to the bank on a regular
basis, before signing any documents to setup the account(s). Note that there
will likely be a waiting period while you and your business are vetted by the
bank/credit union.
Once the account is received, don't start
celebrating too early! A LOT of cannabis companies lose their bank accounts at
cannabis friendly institutions. Why? Because they do not properly maintain
their data, documents, etc. and are eventually given the boot.
Route 2 (most common)
If you are approaching banks on a
branch-by-branch basis, gather your organizational documents, tax returns (if
any), your books, your seed-to-sale reports (where applicable), and make an
appointment to speak with the manager of the specific bank or credit union.
When making the appointment, be crystal clear why you are making the
appointment. There is no point in being coy, only to find out you have wasted
your time, travel, etc. when they tell you right away they will not work with
cannabis companies.
Show up to your appointment in a suit, have
your documentation in order, and be ready to answer any and all questions
posed.
If a question is asked and you do not know the answer, tell
them "good question, I am not positive on the answer, I will make sure I
gather this info and get it to you ASAP". The worst thing you can do is
make things up, at some point they are going to know, don't waste anyone's
time.
Please do not get discouraged if and when a
bank says "no" to you, it will happen at least a few times. But once
you do secure the relationship, you will know you have secured open,
transparent banking, with an institution that is willing to work through issues
with you.
If the bank is going to decline to offer you
banking, ask them to provide the declination via letter.
This is a real **Pro tip**, saving those letters can save you the 10% cash penalty the IRS charges
corporations who pay in cash. I wrote more about that in another blog post.
- Joseph Bailey, CPA
- Joseph Bailey, CPA
For assistance, email info@B-Cconsulting.com and visit BC Consulting website
