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Cannabis Businesses Struggle with Banking Access
9 Sep
Summary
- Financial institutions avoid cannabis businesses due to federal legal status.
- Cannabis businesses face account closures and high fees.
- Credit card giants prohibit transactions for the cannabis industry.
Most financial institutions are reluctant to partner with cannabis-related businesses, even as societal acceptance widens. This hesitancy stems from the federal classification of cannabis as a Schedule I controlled substance. Businesses in this sector face major constraints, including potential bank account closures, elevated fees, and higher interest rates on loans.
Major payment networks such as Visa, Mastercard, American Express, and Discover prohibit transactions for cannabis businesses. Federal banking regulators have stated they have not taken enforcement actions against institutions solely for serving these businesses. However, the potential for legal and regulatory sanctions continues to deter many financial service providers, limiting services like international wire transfers and loan programs.
These banking restrictions significantly impede business expansion and owners' ability to manage financial resources. Challenges extend to employees seeking personal financial services like car loans or mortgages. Congress has considered legislation to offer safe harbor protections for financial institutions that serve state-licensed cannabis businesses, but no such laws have been enacted.
