‘Logic and reason don’t apply': cannabis industry operators and experts share banking challenges

BANKING
Cannabis industry operators share banking challenges 🏦

Driving the news: The cannabis industry is expanding quickly, but operators are struggling to access fair banking services because cannabis remains federally illegal in the U.S.

Why it matters: Without access to payroll, loans, and checking accounts, cannabis companies are forced to rely on expensive workarounds that slow growth and make the industry less competitive compared to other emerging sectors.

The big picture: Even in New York City — the capital of global finance — cannabis operators report difficulty securing loans at rates comparable to other businesses.

Federally insured banks remain hesitant to work with the industry due to the 1970 Bank Secrecy Act, which makes state-legal cannabis revenue appear like money laundering at the federal level.

IRS code 280E prohibits cannabis firms from deducting normal business expenses, making profitability — and therefore access to credit — even harder.

Between the lines: Most cannabis firms now have access to basic checking accounts, but loans are costly and limited. If a borrower defaults, debt collection is unusually complex since licenses can’t simply be transferred like in other industries.

What they’re saying: “Logic and reason don’t apply to cannabis regulation,” Marc Hauser, a corporate attorney for cannabis firms, said. 

Zoom in: Some operators are finding creative workarounds. Martha’s Vineyard dispensary owner Geoff Rose described banking as a “firewall within the banking system.” Others, like the New York Cannabis Retail Association’s Jayson Tantalo, turned to credit unions — though those solutions often expire under demand pressure.

What’s next: Federal reform remains uncertain. 

The long-debated SAFER Banking Act is stalled in Congress, while a possible rescheduling of cannabis could ease tax burdens but won’t fully resolve banking headaches.

Read more in Nolan’s story: Cannabis industry operators and experts share banking challenges: ‘Logic and reason don’t apply’

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