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  1. #1

    Default How to Bank Deposit Money from a Legal Marijuana Business

    My question involves business law in the state of: California.

    A co-worker of mine is working on starting a cannabis analysis lab in Santa Barbara county. Due to cannabis now being legal recreationally, it can be tested by the FDA; and therefore regulations must be adhered too. Seeing as how every batch of cannabis grown must be tested for organic contaminations, pesticides, biological contamination, TCH%...etc... there is a lot of profit too be made with a large potential client pool. The business model is sound, except for one problem, banking.

    To our current knowledge it's extremely difficult to take the legal (by state) revenue generated by the business, and put it into the federal banking system. Even the local banks in town are FDIC certified and would therefor not be legally allowed to take money generated by a federally illegal industry.

    Clearly I'm not a lawyer, which is why I'm seeking help, but what options are available for a company in the Cannabis industry to legally deposit money into the banking system? In my opinion this industry will eventually become legally federally, but until that time, what is legal?

    Credit Unions? Offshore Accounts? Local Banks? Big Banks that don't care?

    Thanks

  2. #2
    Join Date
    Jul 2018
    Posts
    1,733

    Default Re: Marijuana Industry - Where Do You Bank the Money (California)

    Assuming your friend wants his/her business venture to become profitable, he/she would be a fool to do anything in reliance on anonymous strangers on the internet and should confer with a local business law attorney. Given the burgeoning nature of his industry, several lawyers are holding themselves out as having expertise in the relevant laws, so it shouldn't be too hard to find someone.

  3. #3

    Default Re: Marijuana Industry - Where Do You Bank the Money (California)

    They have a couple of lawyers! I am by no means the sole person trying to solve this problem. Sorry, we just wanted to see if anyone here had any options or had heard of anything. If anybody does have advice, I would still love to here it! I'm more auxiliary to the whole thing but have been considering going to work with him (I'm a chemist, very far away from law) if everything works out; and this is there last step to finalizing everything.

  4. #4
    Join Date
    May 2017
    Location
    Florida
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    355

    Default Re: Marijuana Industry - Where Do You Bank the Money (California)

    Cannabis is illegal under federal law so the FDA does not test it or establish any standards. Banks want nothing to do with it. You might talk to local small credit unions but they probably don't want the hassle. Off shore? How do you move the cash? Suitcases? You'd be declaring that, right? Good luck, but I think it's a pickle until the Congress is Washington acts.

  5. #5

    Default Re: Marijuana Industry - Where Do You Bank the Money (California)

    Quote Quoting asa_jim
    View Post
    Cannabis is illegal under federal law so the FDA does not test it or establish any standards. Banks want nothing to do with it. You might talk to local small credit unions but they probably don't want the hassle. Off shore? How do you move the cash? Suitcases? You'd be declaring that, right? Good luck, but I think it's a pickle until the Congress is Washington acts.
    Ahh yes it is definitely quite the pickle. I've heard of local legislation in California that are aiming at addressing this exact issue, but sadly they have not been passed yet. They want to make state sanctioned depositories specifically for the industry.

    Sorry I didn't mean the FDA, California has already passed regulations for the testing of cannabis. I guess I meant statewide.

    Please forgive my ignorance of business and business law, that's why I'm here! I'm unfortunately got my degree in biochemistry; so my knowledge on legal loopholes is and business regulations are somewhat limited.

  6. #6
    Join Date
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    98,846

    Default Re: How to Bank Deposit Money from a Legal Marijuana Business

    Maryland has passed a law that is intended to facilitate banking by legal marijuana companies. In theory the banks that participate in the program could lose their FDIC insurance, but it has yet to happen. In Colorado, some credit unions appear to be opening accounts for marijuana businesses despite their being prohibited from doing so by state and federal law. Until the laws change there is not going to be a good banking solution, and even with changes in state law many banks will be slow to get on board until Federal laws and policies change.

    Marijuana businesses that legally operate in one state (under state law) would still need to be careful about any money management plan that involves banking in another state, assuming that they could even find a bank or credit union willing to open an account for an out-of-state operation. The logistics and legal implications of such a plan should be discussed with a lawyer who is familiar with the laws of both states, as well as federal laws, regulations and policies that may apply under the circumstances.

    Many marijuana businesses store cash in secure storage units.

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