Banking Blues: 3 Tips to Help You Find a Financial Institution to Help Your Business
By Matt Walstatter
Ask any canna-business owner about their biggest concern and nine times out of 10 they will answer banking.
This is hardly surprising when you consider that we are the only multi-billion dollar, legal industry with no access to the banking system. This creates massive inefficiencies, from increased security risks to wasting valuable time paying bills in cash.
This would be a huge challenge for any industry, but we have some special considerations as well.
We are, after all, just coming out of the black market. Thieves know that many canna-business owners remain reluctant to call authorities after a robbery or other incident.
In addition, cannabis is a cash equivalent. This combination of cash and cash-equivalent make us a ripe target for criminals.
If you are one of the few in our industry with access to FDIC insured banking, count yourself lucky. If not, here are three (3) tips that might help you lock down banking services:
1. Ask Around
A handful of banks and credit unions have begun to quietly service our industry. Many are doing this with no publicity, perhaps even turning away businesses that come without a reference.
Ask friends and colleagues in the industry who they bank with. You may find a bank willing to take your cash.
Most of the financial institutions servicing our industry are credit unions or small-to-medium sized, state chartered banks. The largest banks, with many shareholders and enormous concern about reputational risk, will be the last to enter the fray.
Check with these smaller institutions first and you may get lucky enough to find one willing to work with you.
2. Obey the Rules and Keep Immaculate Records
We in the cannabis industry think that we are heavily regulated, but at least in Oregon, it is nothing compared to the oversight that banks face.
Banks have to answer to a number of different state and federal regulators, all of which require them to verify that a cannabis business is following all relevant state and local regulations. This is impossible to confirm without a solid paper trail.
Even if you are fortunate enough to find a bank that will work with the cannabis industry, no institution will work with you if you cannot accurately and adequately verify basic information — like how much you earn, how much you spend, who your suppliers are, whether they are licensed, etc.
If you do not have this basic documentation, you don’t have a prayer.
Record keeping is important. Bear in mind that the goal of keeping records is to prove that you run a compliant business.
If you aren’t following the rules, your records will reflect that. No matter how much documentation you provide, it will all be useless if you are out of compliance.
3. Be Professional
This is an incredibly important point that is often neglected in our industry. Professionalism is a broad category that can (and will) be the subject of its own column, but certain aspects of professionalism are particularly relevant in the context of banking.
Professionals should be competent. Let the bank know that yes, you are a highly competent professional by showing how well you understand your industry and the world of business at large.
This will put them at ease. Conduct yourself with honesty and integrity, and honor your obligations, and it shows people that they can rely on you.
Also, make sure you show up on time. It may seem like a small thing, but people outside our industry think we’re all stoners and expect us to be late. This is because many canna-business proprietors are habitually tardy stoners. Defy their expectations by being on time and presentable…it will be to your advantage. It will also help break down the stoner owner stereotype that hurts all of us.
Exhibiting professionalism can be challenging in the near term, especially if you are accustomed to cutting corners. Ultimately, it will make everything you do, including securing banking, a little bit easier.
Access to banking looms as one of the most significant problems our industry faces, creating massive security and logistical concerns.
For many, banking services remain out of reach. But with a little poking around and a modicum of professionalism, you might just find yourself writing checks from a government-chartered financial institution to pay your bills.
Matt Walstatter and his wife, Meghan, are the owners of Pure Green, a patient owned and operated dispensary in Portland, Oregon. They have jointly owned and operated cultivation centers since 2001. Their dispensary opened in 2013. Matt can be reached at (971) 242-8561 or [email protected]