New organizations in the cannabidiol sphere must stop what they’re doing and find CBD friendly banks before opening a business. Even though the cannabinoid doesn’t cause an intoxicating high, it still isn’t federally legal.
Confusion has reigned since the passing of the 2018 Farm Bill. It legalized the growth of industrial hemp with a maximum THC content of 0.3%. States had to submit their hemp programs to the United States Department of Agriculture (USDA). Almost every state has at the time of writing.
The assumption was that CBD products containing no more than 0.3% THC were also legal. This is not the case. Apart from Epidiolex, a drug containing CBD, no cannabinoid is legal in the United States.
This issue hasn’t prevented the CBD industry from taking off, however. There are thousands of physical and online stores selling products like Purekana CBD capsules. Only a tiny handful encounter legal issues, and that is usually in one or two states.
A bigger problem is the lack of CBD friendly banks. Financial institutions have almost universally shut the door on any business that sells THC or CBD products. The fact that hemp is legal federally is irrelevant. Cannabinoids are not, and that’s what the banking system cares about.
Banks will not do business with any company selling a product or service that isn’t federally legal. They are concerned about facing severe penalties, including losing their banking license. Let’s find out why this situation is problematic for CBD companies, and where they can find help.
Why Are CBD Friendly Banks So Important?
Having a business banking account is essential to the running of any organization. It is a means of ensuring that your funds are safe and secure. Without CBD friendly banks, sellers face significant issues. For instance, it means they cannot accept a variety of payment methods, including credit and debit cards.
Money deposited in the bank is likely monitored and insured by the FDIC. If you don’t have an account, what else can you do with the money? Keeping cash on-site is a considerable risk as it makes your business an obvious target for criminals. Even PayPal doesn’t do business with CBD companies, so options seem limited.
A handful of organizations thought they could slip through the net, but were sorely mistaken. For example, Elavon gave CBD-business account holders 45 days’ notice that it was closing them down. Such actions only serve to discourage CBD companies.
If you can find CBD friendly banks, you could benefit from the following:
- Monthly Contracts: Many of these institutions offer short-term contracts that enable you to walk away if you’re unhappy with any of the terms. They may also renew automatically, so you don’t have to do anything if you are pleased with the service.
- Card Payments: Selling CBD products with a credit card processing machine or app opens up a world of opportunities. Customers get the convenience of paying by card, and you don’t have to keep vast amounts of cash in your store.
- Lower Fees: There are payment processors that charge incredibly high fees because CBD is a ‘high-risk’ industry. Specialist CBD friendly banks will likely charge you less. However, their fees will still exceed those charged by banks to ‘traditional’ businesses.
Where Can I Find a CBD Friendly Bank?
There are a growing number of options online. However, it still requires you to research their terms and conditions. It is also worth getting in touch with other CBD vendors to see who they use. If you feel that the competition won’t help you, talk with other high-risk industries. These include vaporizer and e-cigarette sellers.
Here is a list of a few CBD friendly banks along with their principal place of business. Please note that there is no guarantee of acceptance, and they may not offer services in your state:
- FLC Bank – Florida
- Silicon Valley Back – California
- North Bay Credit Union – California
- Numerica Credit Union – Washington State
- Timberland Bank – Washington State
- Salal Credit Union – Washington State
- Chase Bank – New York
- Partner Colorado CU – Colorado
If one of these CBD friendly banks will do business with you, it offers a foothold in the industry. However, you may also find that generating enough money to get your business off the ground is tricky. You might have to settle for opening a small online store and hoping that it becomes successful enough to warrant expansion.
It is a little easier and cheaper to open a CBD store than sell cannabis. Aside from legal issues, the start-up costs are smaller, and you have a broader target audience.
For those who can’t afford to create a business, there is always the option of finding out what the fuss is all about. Check out top CBD brands like PureKana, to discover what cannabidiol can do for you.