Because the federal government still considers marijuana a controlled substance, U.S. cannabis businesses are forced to operate in cash, but they can't access banking services and, often, neither can their customers.
While cannabis is becoming increasingly legal throughout the U.S., many hurdles remain for those working in the industry. Banks fear they'll run afoul of federal banking regulations if they have anything to do with cannabis, and so they often avoid the industry entirely.
Branded card networks forbid cannabis purchases, and banks and credit unions don't allow ATMs connected to them to be used for cannabis-related trades; instead, they require a third-party service and financial institutions can be subjected to penalties and fines for illegal activities, and officers can even be held personally liable.
In November of 2020, U.S citizens decided who will govern the country for the next four years, but another important decision was made at the polls: several states held votes to determine the future of the legal cannabis industry in one form or another. New Jersey, South Dakota, Montana, and Arizona decided to make marijuana consumption for recreational purposes legal. Also, Mississippi voted to allow medical marijuana. The legal changes have further opened the gates to a burgeoning industry of legal cannabis companies, including those which aim to research and develop cannabis-based medical products, those which are working to distribute and grow marijuana, and many others.
Steven Hawkins, Executive Director of Marijuana Policy Project (MPP) reported recently that U.S elections have moved the ball forward, saying:
"With the passage of these initiatives, one-third of the population now lives in jurisdictions that have legalized cannabis for adult use, and 70% of all states have embraced cannabis for medical use. The federal government is out of step with a clear national trend toward legalization," Steven Hawkins, Executive Director of Marijuana Policy Project (MPP)
Heading into Election Day, 11 states had legalized marijuana for adults 21 and over, and 34 states had legalized medical marijuana. Now, there are 15 legalization states and 36 medical marijuana states in the country. Hawkins further delved into the social implications of Marijuana legalization.
"We can put an end to the social injustices and other harms that result from the criminalisation of marijuana. While cannabis legalisation is not the cure-all to end the war on drugs, it is a necessary step and would provide an opportunity for many long-oppressed communities to finally have a chance to heal." Steven Hawkins, Executive Director of MPP
A patchwork of legalization across the U.S., combined with federal banking restrictions, have limited bank involvement with CBD and cannabis sellers. But potential relaxation of federal administrative rules in 2020, along with the recent approval by voters for legalizing CBD products in multiple states, have encouraged banks to pursue business in this sector.
"Both the legislative and administrative hurdles to offering banking solutions to CBD and cannabis distributors have been removed in 2020, and banks are now stepping up efforts to attract these merchants into their programs," Ronny Yakov, Chief Executive Officer of OLB
The OLB Group, Inc. (NASDAQ: OLB), a provider of cloud-based omnicommerce and payment acceptance solutions for small- and mid-sized merchants, announced its SecurePay payment gateway and OmniSoft cloud-based business management platform are ready to support merchants selling cannabis- and hemp-derived products, including CBD. The services will be available to merchants as soon as U.S. regulators allow.
"As soon as banks are ready to approve these merchants, OLB is prepared to onboard and support their transition from a cash-based payment acceptance process to an omnicommerce business model that includes multiple payment modalities, as well as full-featured business automation and management capabilities."Ronny Yakov, OLB Chief Executive Officer
As legislation surrounding cannabis changes, it's now time for the financial organisations to catch up.
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