Cannabis and Banking
Cannabis is the fastest-growing industry in the US. Almost 70% of Americans believe in legalizing marijuana. The sector will do roughly $50B in 2025 and $150B in 2030. This essentially means that legalization just changed the habits of where people were buying cannabis because it appears that many were partaking anyway. One can now partake legally, meaning the Government has given the products you are purchasing a sign-off as ok to use, and we all pay taxes for that. Sounds good, right?
Cash has many problems, and theft is first and foremost. Here is the biggest problem in the industry right now, banking. It is almost impossible to get a bank account that includes credit card payments for cannabis, although you can use a credit card for alcohol or pharmaceutical products. Many dispensaries take debit cards, but cash is always king when it is turned off.
On top of this, the Federal Government is taxing anyone in the industry under section 280E of the internal revenue tax code. That means that there are no deductions for ordinary and necessary business expenses at the Federal level like you can with every other business in America. This is making it extremely difficult for people in the cannabis industry, be it dispensaries or growers, to turn a profit. What is the point of that when this business increases and those taxes will change the trajectory of many cities and states?
Keep in mind that the Feds are not big fans of moving around a bunch of cash, so that creates more paperwork for all ends of the cannabis business because there isn’t a bank. The cost of that is not inexpensive. Paperwork is needed, just another labor cost to the bottom line.
Just to toss one more thing in here, the NYU School of Professional Studies is offering a certificate in the Business of Cannabis. The curriculum will provide credentials to those looking to hone their skills in this thriving market. Medgar Evers has already done this; they were the first.
Think about that. Places of higher education are providing degrees in the world of weed, but the Federal Government can’t pass banking or get rid of 280E. 280E is just another cog in the wheel, forcing everyone to get accounting and legal help to figure it out. It is insane.
Yesterday the SAFE Banking Act was kicked down the road again. Not even sure what the conversation in the Federal Government is around the 280E tax. It is so egregious on the part of the Senate. Eventually, it’s bound to pass, and in the meantime, they are creating pain and agony for the people trying to build cannabis businesses is one of the fastest-growing industries in the country.
Call your Senator today!