More information is filtering out about the discussions that transpired during this year’s three-day Las Vegas MJBizCon that ended in the week before Thanksgiving. A leading banker from the Partner Colorado Credit Union revealed that it is very expensive for banks to do business with cannabis companies due to the huge amount of paperwork and the regulations which have to be adhered to when providing banking services to the marijuana industry.
Sundie Seefried revealed that her institution had to file more than 7,000 reports to regulators regarding the Credit Union’s dealings with marijuana businesses. Those reports were on behalf of just 220 cannabis businesses.
However, the same Union only filed 226 reports on behalf of 33,000 other clients of the financial institution. The man-hours needed to prepare and file all the reports associated with the banking activity of cannabis businesses makes it very costly to work with those companies.
Consequently, cannabis companies pay a high price for the banking services that they can access from the financial institutions willing to do business with them.
The huge amount of paperwork is a result of the federal laws that still regard marijuana as an illegal substance regardless of what state law may say.
Seefried also revealed that her Credit Union was the subject of an unusually high number of inspections conducted by state and federal regulators. For example, the industry average for such inspections is three in a period of approximately four years.
However, Seefried has witnessed nine inspections by regulators who want to confirm that the financial institution isn’t violating any banking laws in its dealings with cannabis businesses.
Such a high level of scrutiny is more than enough to deter many financial institutions from taking cannabis businesses as clients. Perhaps that could be the reason why more than half of the marijuana businesses in some states can’t find a financial institution to do business with, so they are left with no choice but to operate on a cash-only basis.
A conference participant asked whether it would ease matters somewhat if banks accepted cryptocurrencies from marijuana businesses instead of cash. Sundie Seefried responded that she had been explicitly told that it was already risky enough for her to have cannabis businesses as clients without taking on an added risk of accepting cryptocurrencies as well.
She ended by painting a bleak picture for cannabis banking. She said banks may remain unwilling to accept cannabis businesses as clients even if marijuana is legalized federally. This is similar to what happened to casinos.
More from CannabisNewsWire
CannabisNewsWire (CNW) is an information service that provides (1) access to our news aggregation and syndication servers, (2) CannabisNewsBreaks that summarize corporate news and information, (3) enhanced press release services, (4) social media distribution and optimization services, and (5) a full array of corporate communication solutions. As a multifaceted financial news and content distribution company with an extensive team of contributing journalists and writers, CNW is uniquely positioned to best serve private and public companies that desire to reach a wide audience of investors, consumers, journalists and the general public. CNW has an ever-growing distribution network of more than 5,000 key syndication outlets across the country. By cutting through the overload of information in today’s market, CNW brings its clients unparalleled visibility, recognition and brand awareness. CNW is where news, content and information converge.
To receive instant SMS alerts, text CANNABIS to 21000
For more information please visit https://www.CannabisNewsWire.com