Banking on green: Credit unions and community banks cultivate banking services for cannabis industry

in Cannabis/Market & Currency by

The new year ushered in greener pastures, as marijuana laws decriminalized cannabis use in multiple states.

Therein lies a significant hurdle: banking.

Working to carve a niche in a multi-billion-dollar industry, smaller financial institutions are coming up with innovative ways to provide banking services to cannabis businesses.

With 29 states and Washington DC making marijuana legal for medical or recreational purposes, businesses find difficulty in locating a banking institution that allows them to open accounts and apply for financing.

Since banks employ insurance through the Federal Deposit Insurance Corporation (FDIC), they run the risk of violating federal laws that prohibit cannabis use.

By forcing cannabis companies to work as all-cash businesses or broker funding with risky private investment firms, the illicit world of the marijuana industry continues to thrive.

Other ways people generate money is through home equity lines, angel investors and borrowing from friends and family.

At the same time, limited banking avenues exclude groups from enterprising legitimately. According to Green Rush Daily, in Nevada it takes $250,000 to open a medical marijuana dispensary, while in Massachusetts, applicants must show proof of $500,000 in liquid cash before they apply for a license.

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