Lots of people are getting into CBD oil these days, and not just taking it. With such success stories in the CBD market, it’s unsurprising to see business owners and investors flocking to get a piece of this pie.
However, many would-be CBD investors don’t realize that you need a CBD-friendly bank to start working. Despite the popularity of CBD, banking when you’re involved in this industry can be tricky.
Thanks to a lack of guidance from the federal government and constantly changing legislation on a state level, banks are cautious. There is also a negative stigma surrounding CBD, left over from the days when marijuana was vilified. Sadly, all this can make it tricky to get into the CBD market.
That said, there are some banks that are ‘CBD-friendly.’ In other words, they’re willing to work with CBD companies and investors. Here’s what you need to know about CBD banking.
Why Do You Need a CBD-Friendly Bank?
Any good business needs a business banking account. Unfortunately, it’s hard for companies in the CBD and marijuana industries to set up banking. In fact, many marijuana dispensaries cannot have bank accounts, forcing them to store large amounts of cash on the premises and putting them at risk from robberies.
Storing cash on the premises is never usually a good idea. Banking is pretty much essential in this day-and-age. What’s more, any great business needs to be able to accept credit cards and online payment methods. Typically, this requires a third-party vendor or a payment authoriser.
However, you can’t usually bank with a regular bank if your business is CBD related. Take Elavon, a subsidiary of U.S. Bancorp. A while back, they gave CBD-based account holders a 45-day notice before closing their accounts. This is not an isolated incident; many banks are reluctant to work with CBD and cannabis companies.
It’s essential to find a CBD-friendly bank so that you’re not at risk of a shutdown on short notice. It could do damage to your business that is easily avoided by finding a willing provider.
More on CBD Banking
There are lots of reasons why CBD banking is not a service offered by all institutions:
- The legal status of CBD is changing all the time, and there’s a discord between state laws and national legislation. As a result, banks have to be careful.
- CBD and marijuana-related business (MRB) are considered high-risk, deterring banks from getting involved.
- With so many CBD businesses around, banks have to decide who to fund. It’s hard to distinguish quality companies, like Premium Jane, from scams sometimes, so banks have decided to sidestep the CBD industry altogether.
As a result of all these setbacks, finding CBD-friendly banks can be difficult. However, it’s definitely worth it. Here are just a few of the benefits to CBD banking:
- Monthly contracts: Having a contract that runs on a monthly basis makes it easier to cancel and renew on your own terms.
- Card and card terminals: It allows you to get a card terminal and make use of cashless payments, which is pretty much a necessity in this day and age. You can get these from any bank, but a CBD-friendly bank is much more likely to work with you.
- Customer and web support: Again, this is offered by most banks, but it’s something you should get from a CBD-friendly institution. A secure service will help to build customer trust.
- Lower business costs: Higher fees, such as security fees, are not always present from CBD-friendly banks. Often, CBD banks offer lower rates that means reduced costs for your business.
Options for CBD-Friendly Banking
Thankfully, the number of CBD banks is growing. It’s possible to find several CBD-friendly banks throughout the US – it’s a matter of doing some research and deciding which one best suits your business model. Here are a few to get you started:
- Silicon Valley Bank: This California-based bank offers science and healthcare industry services and lower barriers of entry for entrepreneurs. Furthermore, this bank works with the government to pioneer a better future for its clients.
- North Bay Credit Union: As one of the only American banks to publicly admit handling CBD and cannabis companies, North Bay Credit Union is one for the risk-takers. It currently risks prosecution for its openness, but is still afloat as of yet.
- Chase Bank: Chase Bank is offering bank accounts to CBD businesses, but does not yet provide payment processing services.
- FinCann: This company works with the Cannabis Banking Financial Network, fighting for a better future in cannabis finances.
You can easily do some more research to find out about other CBD-friendly banks. If you know anyone else in the industry, try asking them what institution they use and if they have any tips.
Furthermore, don’t be afraid to look to other high-risk industries such as vaping to see which banks are willing to go out on a limb.