Abaca Banking: FAQs
Abaca is a cannabis-friendly comprehensive banking solution. Here are many of the most frequently asked questions about how the platform delivers financial solutions for cannabis businesses.
- What is Abaca?
Abaca is a financial technology company that works with financial institutions to provide a single point of access for deposit banking accounts, electronic payment services, and lending options for the cannabis and hemp industries.
Due to the differences between state and federal regulation of cannabis, these businesses often find it difficult or even impossible to acquire secure, stable and affordable financial services. Abaca’s solution creates the bridge to bring cannabis and banking together.
2. Why is Abaca able to bank cannabis businesses while most other banks are not?
Traditional banks find it extraordinarily complex and cumbersome to meet all of the compliance requirements of banking the cannabis industry–essentially, banks must track every dollar in and out of an account and ensure it is a legal transaction.
In many cases, banks that wanted to serve cannabis businesses have exited the space because they found it unprofitable. In most cases, banks have simply decided it’s not worth trying.
Abaca solved the conundrum by creating powerful technology that automates and manages the complex tracking and reporting necessary to provide safe, compliant cannabis banking. Every Abaca bank account is housed at a chartered financial institution that has partnered with Abaca to deliver your banking services.
3. Is the deposit account FDIC insured?
Yes. Abaca works exclusively with chartered banks and credit unions. Abaca’s partner banks are members of the Federal Deposit Insurance Corporation, so all deposits are insured up to the FDIC limits. When Abaca works in partnership with a credit union, deposits there are insured by a similar entity, the NCUA. Of course, as with any bank, other services such as lending are not insured.
4. Does Abaca have physical branches?
Abaca’s partnering financial institutions all have physical branches. However, the Abaca banking platform is designed so that everything can be done electronically. This means you will likely never need to visit a brick-and-mortar branch.
5. How do I get cash to the bank?
Retail cannabis businesses tend to be cash-intensive, so Abaca works with third-party licensed, bonded and secure armored transportation providers who are authorized to take cash either to a bank or directly to the Federal Reserve. Once your account is opened, we will place you in contact with our authorized courier in your area to establish your pickup frequency and procedures.
6. What documents are required for me to complete an application?
Required documentation includes customer profiles on the business and all owners, two forms of ID on each owner, your company’s articles of organization or incorporation, its operating agreement or bylaws, and documentation of its EIN (Tax ID number). Additionally, we collect W9’s on the company and all account signers, a resolution authorizing the opening of an account with Abaca and its partner financial institutions, background checks on all owners and signers, and other due diligence our banking partner may request.
7. How long does it take to get an account set up?
Timelines vary depending on several factors. A significant determinant is how quickly you compile and submit complete and correct documentation. Once all documentation is submitted, we typically require a week or two to process and open the account, depending on the number of owners.
8. Is there an initial deposit requirement?
Yes. There is an initial deposit requirement that varies depending on a number of factors, including location, ownership, and other underwriting considerations.
9. What are the account fees and what do they cover?
Cannabis business banking accounts are fee-based relationships, primarily due to the high regulatory compliance costs of providing the service. Contact us to learn about our monthly fees for accounts with Abaca’s partner institutions for ancillary, CBD businesses, cultivators, processors and dispensaries. There are additional fees for multiple locations, and for cash deposits.
10. How can I be assured my account won’t get shut down?
There’s been plenty of press about the headaches you can experience with banking when you’re in the cannabis industry, and we’ve all heard the horror stories. But, you can rest assured that Abaca has partnered with strong and stable banks to build a sustainable cannabis banking compliance program. Together, we’ve been serving dozens of customers across the Central U.S. since early 2018, while standing up to regulatory scrutiny. We’ve even received investment funding from some of the leading venture capital firms operating in the cannabis space to help grow our banking network nationwide.
Long story short? Abaca’s in it for the long haul, just like you. Let’s grow together.