SAFE Banking: 3 Tips from an Expert to Improve Cannabis Banking Services
BY
Nick Saraev
On the Kaya Cast podcast we interviewed Kirsten Trusko, the CEO and co-founder of the Emerging Markets Coalition, where she discussed about the challenges facing the cannabis industry and the financial services it relies on.
Emerging Markets Coalition is an organization focused on normalizing financial services for the cannabis industry. She works with organizations across North America to improve the banking and payment systems for the cannabis industry, which is often burdened by legislation and stigma.
She says how excited she is to dive into this field because there is so much potential.
“Cannabis is an emerging market. It is grossly underserved by the financial services industry. And I think a lot of it is because they just don't understand the market. There are all these preconceptions that are old and a lot of this work is education.”
Keep reading to learn about the challenges facing the cannabis industry right now, what safe banking is and how it relates to cannabis banking services, and some of the best tips about financial services for dispensaries.
Current Challenges with Financial Services for Dispensaries
The cannabis industry is facing a number of challenges when it comes to financial services. From legislation to stigma, it can be difficult for dispensaries and cannabis businesses to access the banking and payment systems they need to operate.
Kirsten explains how the challenges can be more complex than they seem. Issues lie within the states themselves – so regional banks, credit cards, networks, and insurers determine whether dispensaries can meet their financial needs.
This major bottleneck obviously causes problems for dispensaries, which is where safe banking comes into play.
What is the SAFE Banking Act?
The Secure and Fair Enforcement (SAFE) Banking Act is proposed legislation aimed at protecting financial institutions that choose to offer banking services to cannabis companies that operate legally within states that have legalized marijuana. It would permit more lenders to enter the sector, while even opening up the opportunity for plant-touching companies to list on the major U.S. stock exchanges. Unfortunately, at this time, it has not been passed.
The SAFE Banking Act is crucial for the cannabis industry because it allows cannabis-related businesses to access banking services, such as checking and savings accounts, credit and debit card processing, and loans, without fear of legal repercussions.
Kirsten has a particular interest in the SAFE banking Act, of course, as it greatly supports her mission to normalize financial services in the cannabis industry.
Due to the federal prohibition of cannabis, many banks and financial institutions are hesitant to work with cannabis businesses because they are concerned about potential violations of federal laws and regulations.
This lack of access to banking services can make it difficult for cannabis businesses to operate. It can also create safety risks, such as the need to handle large amounts of cash.
How To Improve Cannabis Banking Services
To improve cannabis banking services, and achieve safe banking across the industry, there are a few key steps that can be taken.
1. Educating lawmakers and financial institutions
Improving cannabis banking services requires a comprehensive approach that addresses both the challenges facing the industry and the misconceptions that exist about it.
One way to achieve this is by working with organizations across North America that are dedicated to improving the knowledge and understanding of the cannabis industry and the financial services it requires.
Organizations like the Emerging Markets Coalition are working to educate lawmakers, financial institutions, and the public about the cannabis industry and the important role that banking and payment services play in its growth and success.
This includes working with regional banks, card networks, and insurers to address the challenges of cross-state transactions.
2. Financial education within the cannabis industry
Change happens by educating lawmakers, but in the meantime, we need to protect one another in this industry. And means education within the community itself.
Kirsten mentions how dispensary owners need to educate themselves so they don’t fall prey to scams. After hearing about a recent one she says, “Most retailers wouldn't have fallen for that. It's just that the training isn't there. You are never going to be fraud-proof ever. But you wanna make yourself a harder target than the next business.”
To learn more about how to secure your cannabis business, check out our interview with Sapphire Risk.
3. Engaging with federal agencies to change legislation
Another key step is to change legislation and regulation in emerging markets.
This can be done by working with legislators on Capitol Hill to create laws that will bring about change and make it easier for dispensaries and other cannabis-related businesses to secure financial services.
Kirsten offers some tough love about this situation, as she feels it’s our duty to get involved.
“Get involved. This is a different industry than most have been in. I'm sorry if it’s difficult, but this is how Capitol Hill works. You don't have to like it. Participate or not, but don't whine. It's your choice.”
By engaging with federal government agencies such as the IRS, we can create fair and effective tax policies for the cannabis industry. Through these efforts, we can work to make all transactions in the cannabis industry transparent, traceable, and taxable.
The Bottom Line
Although the financial side of the cannabis industry is still a work in progress, there is a lot of progress being made. With the right knowledge, the right tools, and determination, we can see a bright future for the industry.
If you want to learn more about the financial side of cannabis and get some great insights from Kirsten, be sure to check out our full conversation.
