5 cannabis banking options — plus 4 alternatives

Cannabis banking options are still quite limited for marijuana entrepreneurs, despite 36 states legalizing medical marijuana and 17 states permitting recreational adult use, according to the National Conference of State Legislatures. Since federal law still categorizes marijuana as a Schedule 1 drug — which makes marijuana businesses illegal — national banks fear they’ll violate federal law doing business with the cannabis industry. This subsequently makes it difficult for cannabis companies to find banks that will allow them to open up a business bank account.

Although this may change if the Safe Banking Act passes, for now smaller community banks and credit unions provide the most banking options for cannabis-related businesses.

Are there cannabis-friendly banks?

Yes. As of early 2021, the Financial Crimes Enforcement Network reported that 515 banks and 169 credit unions provided banking services to marijuana-related businesses (MRBs). Unfortunately, not many banks openly advertise themselves as a cannabis-friendly bank or their willingness to work with MRBs.

And while cannabis-friendly banks do exist, they generally have internal policies limiting how many high-risk customers they’re willing to take on. Each financial institution ultimately decides whether to provide banking services to a cannabis-related business, including hemp, marijuana or other cannabis derivatives.

How to find one

With federal and state red tape, your best bet to cannabis banking is to start with local community banks and credit unions, which have fewer federal regulations. Then, you can narrow down your list to financial institutions willing to take on high-risk customers and shoulder the responsibility to make sure their customers comply with state regulations.

Since many banks don’t advertise that they have cannabis businesses as clients, it never hurts to ask. Inquire about the bank’s compliance standards, requirements and reporting procedures. And be ready to do your due diligence by producing all the necessary documents.

Compare 5 cannabis-friendly banks and credit unions

We’ve done the research for you and have identified several cannabis banks and credit unions willing to work with cannabis businesses.

Numerica Credit Union

Numerica Credit Union was one of the first credit unions in Washington to provide cannabis businesses with banking services. You’ll get access to checking, savings and money market accounts as well as online banking.

But it only works with licensed cannabis producers, processors and retailers that operate in Washington. And its website is pretty slim on details about its cannabis account.

Partner Colorado Credit Union

Partner Colorado Credit Union offers cannabis banking through Safe Harbor Financial, a Partner Colorado Credit Union division. It had over 500 accounts in the cannabis industry as of May 2021.

But you’ll need to go through an extensive application process that generally takes two to three weeks. The lengthy procedure includes submitting detailed records, a face-to-face interview, a site visit to your business and a third-party compliance audit.

For the businesses that get approved, you’ll also get access to armored carrier services for daily cash deposits. And after banking with Safe Harbor for one year, you’ll be eligible to apply for commercial real estate loans and home mortgages for cannabis business owners.

Timberland Bank

Timberland Bank is one of the few cannabis banks that we could find. But you won’t find that it advertises its cannabis accounts anywhere on its website, and its branches and ATMs are only available in Washington.

Its 2020 US Securities and Exchange Commission (SEC) annual report filings confirm that the bank has checking accounts owned by marijuana-related businesses, which make up approximately 2.6% of its total deposits.

Salal Credit Union

Salal Credit Union offers a multitude of banking services for cannabis businesses in its community. You’ll get a designated account manager, cash pickup and delivery services and employee accounts. Your business can also apply for secured capital equipment loans and real estate loans.

Membership eligibility extends to licensed businesses that operate in the Washington and Oregon area. During the application process, you’ll need to demonstrate good credit and strong finances.

North Bay Credit Union

Offering cannabis banking since 2017, the North Bay Credit Union is one of the few financial institutions located in California. It offers cannabis, CBD and hemp business checking accounts, whose banking services include electronic processing services, electronic bill payments and digital banking.

Qualify for membership if you meet one of the following criteria:

• Your business is in Sonoma, Marin, Napa or Solano County
• You’re a member of the California Cannabis Industry Association (CCIA)
• You’re a member of the National Cannabis Industry Association (NCIA)
• You’re a member of the Sonoma County Farm Bureau

The nonrefundable application fee costs $1,000. If approved, your monthly fees are assigned based on North Bay Credit Union’s risk assessment of your business operations. It generally takes 30 days to open an account.

3 factors to consider when comparing cannabis-friendly banks

While cannabis banking availability is a significant factor in choosing your bank, consider the following additional criteria when comparing where to keep your money:

• Price. Cannabis accounts generally come with higher fees than traditional business accounts because they require greater oversight and paperwork and operate in a higher-risk industry.
• Membership eligibility. Banks and credit unions can only work with licensed marijuana-related businesses. And you’ll need to provide sufficient documentation during the application process and follow cannabis-specific guidelines to avoid account closure.
• Customer support. As with any financial service, consider how easy it is to get in touch with a representative if you need help with your account.

4 cannabis banking alternatives

If you don’t want to go the traditional business banking route, consider these financial services for your business:

• Payqwick. A nonbank financial institution that provides compliant banking and payment solutions to licensed businesses, including cash pickup.
• Canpay. A payment app that allows customers to make cannabis purchases with a debit and credit card.
• Hypur. An electronic payment platform that offers customers a secure, free digital payment option connected to their checking account.
• Dama Financial. A financial service that gives your business access to online banking and cash courier services.

3 banking tips for cannabis companies

Here are a few tips and tricks to help legitimize your business in the eyes of the banking industry:

1. Detailed documentation. Be ready for due diligence inquiries from the bank. That means you may need to produce copies of your marijuana license, sales records and inventory logs to make sure you’re in compliance with banking regulations.
2. Transparent communication. Maintain a transparent and honest relationship with your bank, especially if your business experiences any changes after becoming a customer. That way, your bank won’t flag these changes as suspicious activities or transactions that could jeopardize your account.
3. Avoid illegal workarounds. Banks must comply with the Financial Crimes Enforcement Network’s (FinCEN) guidelines, which include attempting to conceal or disguise your marijuana-related business activities by using a middleman to deposit cash.

Bottom line

While cannabis banking may be hard to find and qualify for, it’s not impossible. Your best bet is to look to local banks and credit unions for your cannabis business banking needs until the Safe Banking Act — or an equivalent — passes and banks receive more federal guidance.