Of the many issues that prevent cannabis businesses from acting like regular businesses, their lack of access to banking is probably the most hindering. Since commercial cannabis activity remains a federal crime, the federal Bank Secrecy Act prohibits financial institutions from accepting cannabis-generated dollars. Most cannabis businesses therefore must operate on an all-cash basis. This makes them targets for actual criminals and helps further the need for access to a bank account.
This lack of bank access in turn creates desperation, which hucksters and fraudsters then prey upon. This post is dedicated to helping cannabis stakeholders avoid those who blow smoke about “marijuana banking.”
Because cannabis is still a Schedule I controlled substance, proceeds from cannabis sales trigger anti-money laundering laws for banks. The Bank Secrecy Act requires banks combat fraud and money laundering and protect against criminal and terrorist activity. Certain banking laws require national banks file Suspicious Activity Reports with the federal government when it knows or suspects an account holder is engaged in or trying to cover up illegal activity. Consequently, banks routinely deny or shut down cannabis business bank accounts (and cannabis-based financing) even in cannabis-friendly states.