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Legitimate cannabis banking for dispensaries

Are you a dispensary business owner wondering where you should keep your money? Banking and finances are not something that most business owners enjoy. There is no point in opening your dream store if you have to sit in front of spreadsheets for endless hours. However, if you are a cannabis dispensary, it is more than just a headache. It's a serious security risk.

As the access to financial services can be so challenging for dispensaries, a surprising question arises: where do they keep their money?

Is the money in the bank, isn't it? Doesn't everyone keep their money there? It is, however, a much more complex situation and raises serious concerns about the current state of cannabis banking.

In what state is cannabis banking at the moment?

The differences in legality between the federal and state levels cause almost every problem faced by the growing cannabis industry. In many states, cannabis is legal to grow and sell, so the cannabis industry is flourishing. The problem is that since cannabis is illegal at the federal level, big banks and other financial institutions are hesitant to open accounts for cannabis-related businesses for fear of having to deal with federal authorities.

To keep their money from being stolen, many dispensaries have resorted to hiring armored trucks and security guards to protect their money, as this situation is so dire. Dispensaries are robbed daily, which has led to an increasing number of guns and high-tech security systems.

How is the money kept by dispensaries?

It would be better to ask, where are dispensaries not keeping the money they make? Any major bank or credit union in the country does not service the cannabis industry. Smaller community banks and credit unions have stepped in to fill the gap left by large banks.

Nevertheless, it is not always an adequate replacement.

These institutions usually require more paperwork, stringent compliance controls, longer timeframes, and more admission requirements. As a result, dispensaries' bottom lines are affected. However, it is better than not having access to banking at all.

According to the Financial Crimes Enforcement Network, a total of 515 banks and 169 credit unions provided services to cannabis-related businesses in the early part of 2021. It is an important step in the right direction that has been taken.

These institutions are not usually doing so to cash in on the booming industry but rather to serve underbanked businesses within their communities. Empirical Solutions, for example, was founded to "provide cannabis businesses a secure place to bank and a meticulous process to assure funds legitimacy." It's successfully servicing its community with over five cannabis banking accounts and more than $1 million processed since 2019.

Not all banks and credit unions are as friendly as Empirical Solutions. Despite providing account services, some won't advertise their association with the cannabis industry. Meanwhile, many newer banks and financial institutions are just trying to make money. A common problem is the lack of expertise they have in handling accounts related to cannabis. A lack of regulatory compliance can lead to unwanted federal scrutiny.

Taxation and banking

The current banking situation is confusing, but taxation is even more frustrating. There is a curious position the federal government is in, in that it has to tax companies that it deems illegal to make money.

Paying taxes to the IRS is still necessary even though you do not have regular access to banking services. Consequently, marijuana businesses use IRS Code 280E, which is associated with illegal drug trafficking. Furthermore, dispensaries often deposit cash at the state level for tax payments. For example, in Salem, OR, dispensaries must deposit money into a heavily guarded bulletproof site.

Why is cannabis banking vital?

If you can open a cannabis bank account, you should. Here's why:

As we've discussed, theft is the biggest risk to a cash-rich business. There's a reason why people don't sleep with cash under the mattress. Moreover, safes only store so much cash.

To dissuade would-be thieves means investing in costly security systems. Employing guards to protect assets further digs into profits, potentially increasing prices. It also makes previously routine financial tasks like paying taxes a logistical and legislative nightmare. Maintaining excellent bookkeeping is critical in such a situation – but opening a cannabis bank account is far easier.

How should a cannabis bank account be opened?

To find the best financial institutions near you, you should speak to other dispensaries and research online. A bank or credit union with a high level of experience dealing with high-risk businesses should be the first place you look for.

  1. It is essential to always remain honest and open about your business. You should never mislead a financial institution, as this can lead to the closure of your account.

  2. Be sure to have all the necessary documentation, such as business and marijuana licenses, sales records, property deeds, and inventory logs.

  3. The fine print should be read carefully. Your account's capacity and limits should be clearly defined.

  4. It is crucial to consider the fees involved. There is always a cost associated with opening a high-risk bank account. There is more to account maintenance fees than just monthly fees. Additional fees, such as those associated with wire transfers, payroll, online banking, and so on, must also be considered.

  5. We will provide you with a form to fill out, and you will be able to create an account on

It may be necessary for your bank or credit union to ask you for all the documents related to your application if you apply for an account. It will also be required for you to prove that every dollar going into the account is from a legal sale in your state.

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