Follow the money: Finance and banking issues for cannabis entities

Funding sources and banking services are a necessity for every business. However, cannabis-based entities can find this aspect of operation challenging since cannabis is still illegal on the federal level and financial institutions may be unwilling to work with them. Since many cannabis companies are cash based, there are stringent requirements to follow in addition to existing banking regulations when serving these entities and banks must be aware of the risks involved and understand how to mitigate them.

ALM Global recently released the sixth course in its Cannabis Insurance Coverage Specialist (CICS) designation, Banking and Cannabis: Best Buds or Up in Smoke?, which addresses a number of financial factors affecting legalized cannabis and cannabis-related businesses. There are multiple “gray” areas surrounding how a product is identified. Is it hemp? Is it marijuana? Both are considered cannabis, but the concentration level of a cannabinoid known as Delta-9, the controlled substance that creates the euphoric “high” for users, varies significantly in these two substances and affects how financial institutions work with entities selling these products.

The course explains these issues as well as the impact of the proposed SAFE Banking Act, federal and state banking regulations, and recent legislation changes, and identifies what a strong banking program for cannabis entities should include.

“Financial institutions have traditionally avoided cannabis businesses; however, as the industry has grown, financial services have become more needed,” notes Molly Miller, ALM’s chief content officer. “With this course, we wanted to address cannabis-related financial issues and liabilities.”

Miller adds that the course provides valuable information for anyone looking to run, fund or insure a cannabis-related business.

The financing module completes the six-course CICS designation developed by ALM Global. Other aspects of the designation include a general overview of the industry and address issues related to claims, real estate, risk management and workers’ compensation.

For more information on the CICS, visit www.nutraining.com or contact Johanna Abshear, client success coordinator, at jabshear@alm.com.

Related:

6 keys to ensure cannabis businesses are properly insured

ALM launches new course focusing on workers’ compensation issues for cannabis businesses

Cannabis financing: How to secure capital in a cash-only industry