How Cannabis Businesses Can Access Banking and Insurance Services

With apologies to Ben Franklin and others, nothing is more certain if you run a cannabis company than your need to access banking services and insurance (FWIW, the death and tax department might as well). This is true (1) as a practical matter and (2) often legally. Criterion.

The problem

In practice, cannabis operators need a place to deposit and keep money and secure the business. After all, the cannabis industry remains largely a financial business, and anyone running a business should have various levels of insurance to protect against the worst.

And as a legal matter, many states require insurance as a requirement for cannabis operators. For example, Alabama’s new medical cannabis law requires[a] A letter of undertaking or other acknowledgment…that the applicant may post a performance bond issued by a surety insurance company approved by the Commission in the amount of two million dollars” (Ala. Code § 20-2A-67(d)).

But one of the many pitfalls in the cannabis industry is that operators can’t easily find two things they want to have. Most large and reputable banks and insurance providers do not offer services to cannabis-related businesses, especially those that deal in marijuana. As we wrote recently, the reasons range from money laundering concerns to reputational issues to institutional efficiency.

The solution

Cannabis operators need not despair. There are banks and insurance providers that provide services to cannabis businesses. Certainly, most banks and insurance companies are not servicing the cannabis sector. But such providers are on the rise. Bradley Cannabis Attorneys regularly make introductions to banks and insurance providers on behalf of our clients.

Cannabis operators must pay close attention to the importance of banking services and insurance for practical and (often) legal reasons. And it’s almost too soon to start looking for those services, because the process almost always takes longer than it takes for a non-cannabis business. So perhaps the final message is be diligent but don’t worry – and talk to us.