Top 8 Tips on Getting a Cannabis or Hemp Bank Account (Revisited)

We’ve learned a lot over the last several years. So we thought it was high time to revisit our top list of tips on how to get a bank account for your state-legal cannabis business.

When looking for a bank account keep in mind that banks and credit unions are under intense scrutiny from federal banking regulators. This is why most banks don’t take deposits from the industry. When seeking to open a commercial account from a willing institution, expect a lot of questions.

8 Tips on Getting a Cannabis or Hemp Bank Account (revisited):

1. Don’t misrepresent the nature of your business. We have seen businesses go this route. But it isn’t hard for a bank to spot your business profile. Few industries deal in high volumes of cash. Consistent high cash deposits are a telltale sign of a marijuana business. At minimum, your account will get canceled and your business operations will be disrupted. 
2. Have your legal and governance documents in order. Permits, EIN numbers, banking resolutions, etc… It takes a significant amount of information for a bank to properly satisfy regulators. Whether you are just starting your business or you’ve been in operation for years, you’ll need to have your documents in order. For a full list, check out our list of common Banking Due Diligence Items.
3. Review your online presence. Make sure your website, online business profiles, and online your presence reflects your company’s values and brand. Banks working with cannabis businesses want to know they are doing business with reputable people.
4. Be prepared to show the source of funds. If you are making a large initial deposit, you will likely be expected to show a source of the funds. This could be income from business operations, which can be shown on banking statements and accounting documents. If it is an initial capital contribution to start the business, you may need to show personal financials.
5. You might need to already have some critical vendors onboard. Solid inventory tracking is a must-have. Working with a reputable seed-to-sale provider is to your benefit and with many banks it is required.
6. State compliance is important. Federal guidance requires banks to do their best to ensure cannabis businesses are operating in compliance with state regulations. You can demonstrate this with independent consultant assessments or opening inspection reports by regulators. Don’t be surprised if the bank asks to stop by to see your operations as well.
7. Do your due diligence. There is a lot of instability in cannabis financial services. Luckily that is changing for the better. Make sure your banking partners are highly rated with regulators. Also be aware that in new markets sometimes financial institutions get out of the business just as quickly as they got in it – like in Oklahoma and Illinois.
8. Find the right partner & be transparent. About 70% of cannabis businesses have at least some financial relationship, so it isn’t true that the industry is “unbanked.” However, about 30% are still operating without an account so the industry is still very much underserved. Finding a financial partner that is willing to tackle the compliance and enable banking services will reduce the your exposure and reduce the risk that your services get interrupted.