Cannabis Banking Challenges

What type of banking fees typically apply for marijuana businesses? 

Serge: Most of the banking is backward—you pay for the deposits that can range from one percent to multiple percentages of the deposit. However, such arrangements are becoming more competitive and I believe that the pricing will come down. Eventually, it will be just like a regular bank. 

Most of the fees on the arrangements that I have heard of are on the cash deposits, which are the weakest part of this whole scheme. Over the last three years, we’ve seen less and less cash in the business. We’ve seen more checks coming into the mix from customers paying us for our products. I believe that people have more access to banking arrangements today.

 
Are fees and other issues the same for medical marijuana growers? Or is this an issue that only recreational marijuana growers face? 

Shirreff Insurance - low.jpg

 Serge: Because any marijuana is a federally prohibited trade and banks mainly rely on the FDIC as a way to secure their assets to the depositors, I believe there is a conflict.... I know some of the small and regional banks are looking for alternatives to FDIC insurance and to instead go with additional rigorous ways of conducting their due diligence and investigations of the underlying businesses. That gives them the opportunity to actually conduct that business.
 

Have existing issues become more pronounced under the current administration? For example, finding a bank, banking fees, etc.? Are there any other notable changes since January 2017 that have a negative or positive impact on the marijuana industry? 

Serge: I don’t think that the administration has anything to do with it. When Trump indicated in the early days during the campaign that the legalized [cannabis] industries would be controlled by the states, he reassured us that he would not put a foot down and prohibit the recreational and medicinal state markets. That does not mean that they cannot change classifications and go back on the farmer’s bill, and declare all parts of the plant to be marijuana (even the non-used stocks of the hemp plant from which some extractions of the medicine are possible). 


What do you see for the future?

Serge: Today, banks are going into the industry because of the competition. They are looking at the billions of dollars flowing through the system, which are always collected by banks that are willing to do the extra work. I believe it’s about capitalism. Right now, more and more banks have an appetite to increase their earnings, deposit base, and bottom line. They will open their doors to our industry.


serge-chistov-1.jpg


Serge Chistov is the financial partner for Honest Marijuana Company, which uses all-natural cultivation methods to produce only the finest organic and eco-conscious cannabis products. Their marijuana is packaged in Earth-friendly recyclable tin cans with pure nitrogen to ensure only the highest level of integrity and quality. The company also recently launched their new Honest Blunts, the first organic hemp-wrapped, machine-rolled cannabis blunts. Visit the site at https://honestmarijuana.com/.