Cannabis businesses can face steep challenges in order to land a marijuana friendly bank account. But there is good news….because there are some steps that businesses can take today that will make getting an account a little easier.
First, understand that banks are under intense regulatory scrutiny when they take on marijuana accounts. For that reason, they may dig deeper into accounts, businesses, and owners than they do for non-cannabis businesses. Being prepared will help you get over the due diligence hurdle with banking compliance officers.
Don't misrepresent the nature of your business to land an account. At minimum, you'll get discovered, reported and have your account closed without or with little notice. (FYI - Cannabis deposits typically smell like cannabis and your account profile is easy to spot with all the large cash deposits.) At maximum, this could increase your legal risk as this is, by definition, money laundering.
Have your governing and founding documents in order. Some cannabis businesses can have complex legal structures. Make sure your owners and operators are clearly defined in operating agreements. If you have entities with ownership interest, their governing documents will be subject to review as well. By 'governing documents,' we mean operating agreements, Articles of Incorporation or Organization, EINs, etc.
Go ahead and create an online business profile and website to create your digital footprint. Financial institutions look for this to learn who you are as a part of their "know your customer" checks for businesses. Give them something positive to look at that reinforces your professionalism and dedication to running a compliance and legal business.
Credit and criminal history are a factor. Although some states allow prior convictions, federal guidance to banks tells them to watch out for owners with connection to drug-related offenses and this could ultimately prevent your business from getting banked. It would be good to know if this could be an issue with potential partners.
You don't need or want "marijuana," "cannabis," "420," or any other marijuana related word in your company name. Always refer to rule #1, which is "do not misrepresent your business." However, do yourself, your bank, employees, vendors and the industry a favor by leaving these words out.