Marijuana banking options are limited for many entrepreneurs despite the fact that several thirty-six states legalize medical marijuana use. While recreational use is allowed in some states, there is still an uphill battle for other states that only have medical marijuana clearance.
Thanks to a recent cannabis banking bill that has passed in Pennsylvania, cannabis-related businesses now have the right to use financial institutions and insurance for their businesses. Continue reading below to learn more about this bill and how it can affect your business. This brief guide will explain the new bill and who you can contact for more information related to medical marijuana.
Marijuana Banking Bill
On April 13, 2022, the Pennsylvania Senate approved a bill that provides legal cannabis businesses access to insurance and banking services. The Senate bill, Bill 1167, authorizes insurance companies and banking institutions with the ability to provide services to cannabis business owners.
Pennsylvania Cannabis Legislation SB 1167
In addition to allowing insurers and financial institutions to do business with cannabis businesses, it also protects them from any state penalties. The reasoning behind creating this bill was to ensure that companies, including cannabis businesses, had access to financial and insurance services. At the basis of any legal business are protected from any claims, theft, and fraud, and allowing them access to insurance and proper banking channels gives them that protection.
Marijuana Insurance Reform
Pennsylvania legalized marijuana back in 2016, but there were federal prohibitions that prevented insurance companies and banks from servicing businesses in the cannabis or related to the cannabis industry. This forced many small businesses to operate using cash only, which made them targets for robberies. Not only did this jeopardize the safety of the employees, but it also endangered patients and the communities .
What the Bill Does Not Do
Although the bill protects cannabis-related businesses from state penalties, it does not protect them from any federal ones. Agencies also cannot recommend or incentivize insurers or financial institutions to not provide their services merely because you run a cannabis-related business.
Federal Classification of Marijuana
Federally marijuana is considered a Schedule I substance under the controlled substance act. This means that the drug has a high potential for abuse, and there is no widely accepted medical use in the United States.
There are some states that allow the use of marijuana, but there is no federal law confirming this. What this means is there is still a chance that businesses could face federal repercussions for selling marijuana-related products. As of right now, the Cannabis Legislation SB 1167 only covers medical marijuana use, not recreational.
How the Law Defines a Legitimate Cannabis-related Business
Per the law, a legitimate cannabis-related business is one that handles, cultivates, dispenses, sells, transports, and produces marijuana or marijuana related products. This company must sell the product in compliance with federal laws or laws established by another state.
How To Find the Right Bank or Insurer
When looking for the right financial company for your marijuana related business, there are limitations. For example, not all banks take on cannabis-related companies, nor do they advertise if they do.
If you have a bank in mind, you can ask them about their compliance standards, reporting procedures, and requirements. If they are willing to take you on, be sure to have your documents on hand.
Factors To Consider With Cannabis Friendly Banks
Once you find a bank to work with you and your business, be mindful of the fees. Business accounts related to cannabis generally come with higher fees than traditional bank accounts.
This is because these accounts require greater oversight and paperwork to ensure complete compliance. They also cost more because marijuana is a “high-risk industry.” The government still considers marijuana to be a Schedule I drug, which leads to many risks that come with the industry.
When looking for the right bank, you should opt for one with excellent customer service. A banking team that offers fast, reliable, and supportive service for your cannabis related business is helpful.
More so, it would be best if you opted for a company that understands cannabis related laws and regulations. If you have any questions about federal regulations or state regulations regarding your bank account, they can help you.
Credit unions and banks can only work with legitimate licensed medical marijuana businesses as of right now. So if you sell marijuana without a business license, you won’t be able to work with these banks.
As long as you have your proper licenses and sufficient documentation to prove this, you should have no issues. Just be sure to follow the proper protocols and have your paperwork ready in case of an audit. This will help ensure that you avoid account closure.
Marijuana Banking and Other Information
Thanks to this new bill being passed, marijuana banking is something that can happen at the state level in Pennsylvania. Congress members push to have this recognized federally so that all states could reap these same benefits. For those who wish to get their medical marijuana card in Pennsylvania or other states, check out our resources here to learn more!Get Your Card Now