Those same practices are often intrinsically already applied by the states track and trace system, Metrc, and it seems that legal states could be more helpful in affording banks an easier solution to track those legal operators.
Regarding the federal initiative, if Congress fails to act, the biggest banks in the United States will continue to look the other way as their biggest clients make private investments, but then turn away transparent operators, furthering the divide between Main Street and Wall Street.
Flickinger: There are cannabis banks that do exist and do support the entrepreneurship of cannabis. DAMA being one, and Safe Harbor being another just off the top. I am getting emails from different payment processing companies that also help streamline financial operations.
So it seems there are ways through, beyond whatever Congress may or may not do. The downside is of course, that cannabis banking is usually very costly, and makes it difficult for small businesses to participate. With today’s cannabis market taking a dip in wholesale prices, we do need solutions that are more affordable, and I think we may begin to see other folks step in with non-traditional ideas that could be useful.
Hattan: Banking needs to be addressed immediately at the federal level. This is another reason that the regulated market cannot complete with the unregulated market. The costs associated moving cash around the state from retailers to distributors and from distributors to farmers and manufacturers go beyond just the physical costs of moving money.
The result is that cash is slow moving through the supply chain, and when there aren’t options for traditional loans, this has a real impact on businesses. Additionally, you are paying employees to drive around to pay bills in cash and record-keeping is significantly more complex.
The other major reason Congress needs to act is because cannabis businesses now employee hundreds of thousands of people. Getting loans for homes, cars, etc. is more challenging and people are still losing personal bank accounts for being associated with legal cannabis companies.
When Congress finally does act, it will also have to address 280E, a section of the IRS tax code, that prevents cannabis companies from writing off normal business expenses and only being able to deduct COGS. This tax code results in cannabis companies essentially paying income taxes on their gross sales.
Melrod: Banking is very expensive and burdensome for cannabis companies, and because of this, many small operators are forced to operate all cash businesses. This is unsafe and risky. If Congress doesn’t make changes, banking will continue to be extremely cumbersome and cost-prohibitive for many.
Mercer-Ingram: Cannabis banking has become much more accessible in the past several years. While Proof is glad to have a cannabis-compliant bank account, the fees are very high, we are unable to access traditional business lending, which has the effect of inhibiting growth.
Another big issue is that investors struggle to move money into cannabis due to Federal illegality and banking issues. Retailers and most supply chain operators struggle with cash logistics, which adds hugely to the cost of doing business, not to mention the security risks introduced to the public.
Federal cannabis legalization is a commonsense move, and the voters know it; national polls reflect strong and diverse support. We just need to see action from our elected officials.
States, at least 36, have so far have legalized cannabis in some forms. Yet cannabis continues to be illegal on federal books. What's the future of interstate commerce of cannabis products if this continues as is?
If Congress fails to pass cannabis reform, state cooperation will likely be the only option. Advocates and legislators in several states have been working on ways to allow cannabis to travel between legalized states.
However, this type of legislation would likely be vulnerable to legal challenges. Eventually, there will be a change in interstate commerce, whether federal or between states. To be competitive, California needs to lower taxes and ease regulations. Otherwise, California will continue to lose out to more lucrative states like Illinois, Massachusetts, Colorado, or basically every other state.
States, at least 36, have so far have legalized cannabis in some forms. Yet cannabis continues to be illegal on federal books. What's the future of interstate commerce of cannabis products if this continues as is?
Candell: Cannabis will become legal federally – it is inevitable. At that point, all cannabis for the entire country will be grown in California and exported to the rest of the country. Small growers have to hold on until that happens.
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Northern California's billion-dollar cannabis industry sees big issues to resolve - North Bay Business Journal
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