While you might look at hemp as a less fun alternative to marijuana, it’s a serious business that’s growing as much as the mainstream marijuana industry. At the heart of this is CBD, or cannabidiol, a major compound found in hemp and marijuana. However, CBD can help bring many therapeutic benefits without causing a high.
Even if CBD doesn’t sound nearly as appealing, it’s an excellent source to manage certain conditions for those who don’t want a psychoactive experience.
Growth for the industry is now expected to shoot to $2.1 billion by the year 2020. Despite this growth, regulations from banks are still a big problem.
Take a look at some of the issues CBD still faces with banks, namely in financial institutions being afraid to work with these businesses.
Why Are Banks Reluctant to Take on CBD Businesses?
Banks are still on a long rocky road to working with businesses specializing in marijuana. Even though the Obama Administration issued guidelines to banks to provide a financial outlet for marijuana businesses, it’s an ongoing sticking point.
The problem is many banks still worry about getting in trouble with the law for providing financial services to the CBD industry. They also don’t want to bother taking part in the extra resources needed to make it legal.
It’s possible for banks to take part in legal states, but will they take on an industry that they still deem risky?
For those of us in the CBD industry, it’s still a dilemma on how to create decent commerce in selling hemp products.
The Challenge for the CBD Industry in Using Cash
Because the bank industry is still so reluctant to join the marijuana commerce fray, it’s left CBD businesses to pay all their bills and make sales using cash. This isn’t an easy process when you have to pay employees this way considering it requires keeping cash on hand.
Having to store cash in a business is always a security risk since it could easily become lost or stolen. When cash flow is just as important to CBD sales as any other business, losing cash can become devastating.
It’s required many in our industry to find creative ways to store money, sometimes meaning burying it to keep it safe.
Just a couple of years ago, 60% of all cannabis businesses didn’t have a bank account to do business. Is change coming in the coming year and beyond?
Which Banks Are Open to CBD Businesses?
Last year, the AP reported that banks across the country willing to handle money for the weed industry rose considerably. It went from 51 banks several years earlier to 301 banks by 2016.
In legal states like Oregon, Washington, and Colorado, it’s becoming slightly easier to open an account, even if the banks don’t make it easy.
The process involves providing company ownership details, a detailed explanation of your business, licensing and permit information, documentation on compliance regulations, and information on deposits.
As thorough as this, you have to consider it’s a vetting process to protect the bank as well as yourself.
The Problem with Credit Card Vendors
Even if banks are starting to come around, many U.S. credit card vendors still refuse to allow CBD businesses to do commerce through them. This can complicate associations with banks, and it’s going to require finding an alternative cash management supply chain.
The vendor you use has to comply with federal, state, and city laws, including ways to keep your cash safely managed. Fortunately, merchants in the U.K. are more CBD-friendly, though it adds more complexity to transactions. Many U.S. banks block transactions from these banks or charge international fees, slowing down the buying process.
Keep reading us at Green Wellness Life to learn about our own CBD business and how we can do business with you by cash or bank.