CCIA Banking: Did a Trade Group Just Solve the Cannabis Banking Problem?

CCIA Banking

If the cannabis industry is growing by leaps and bounds—some estimates suggest that nationwide legalization would create a million jobs—there’s another side to the cannabis boom that gets less press: The banking dilemma. As you well know, because cannabis (despite those rosy forecasts) remains a Schedule I substance under federal law, access to traditional banking services remains a headache for business owners, sometimes an extreme one. Though the nationwide cannabis market is currently credited with some $15 billion in annual revenue, many cannabusinesses are still operating on a cash-only basis.

That’s why a new arrangement midwifed by the CCIA—the California Cannabis Industry Association—is a potentially huge deal. Here’s the inside scoop.

CCIA Banking Deal: A Credit Union Comes to the Rescue

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Source: CCIA

While California represents the largest legal cannabis market in the world, many cannabis businesses operate without reliable access to even basic banking tools. And it’s not just dispensaries; companies that do business with cannabusinesses—cleaning, marketing, and packaging firms, for example—can also find themselves liable for expulsion by their banks.

If these companies do manage to find a willing business partner—typically a smaller credit union—they’re often hit by unusual and outsize fees. That’s why the CCIA brokered an agreement with North Bay Credit Union, a Sonoma-based organization that’s been helping small businesspeople get access to credit since 1948.

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Source: North Bay Credit Union

North Bay is no stranger to the cannabis sector. Since 2017, the credit union has offered the industry such banking services as business checking accounts, online access, and merchant processing services. But the organization is, by and large, an outlier.

That’s why the CCIA’s announcement of its banking plan is causing such a stir. In one fell swoop, it gives the association’s 400 industry members access to many of the services any other businessperson would expect as a matter of course. What’s more, the arrangement allows the roughly 15,000 employees of CCIA members access to banking services as well.

CCIA Banking Deal: A Sign of Things to Come?

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While the CCIA deal is big news for members of California’s cannabis industry, it doesn’t address the national deficit of secure banking services for cannabis businesses. However, there’s hope on the horizon. As we shared last year, the SAFE Banking Act promises real and lasting change for the cannabis industry. The bill has been inching its way through Congress for nearly a year and a half; after passage by the House in September 2019, the bill has been stalled in committee ever since.

With control of the Senate having just passed into Democratic hands, there’s hope that the Act will finally become law sooner than later. The new chair of the Senate Banking Committee, Pennsylvania Senator Pat Twomey (R), has signaled his openness to moving the bill forward. By comparison, his predecessor—Idaho Senator Mike Crapo (R)—was taken with placing unrealistic conditions on the bill, such as limiting the THC content of cannabis products to 2% in order for businesses to be eligible for financial services.

Needless to say, we’re keeping a close watch on this potentially huge development for cannabis industry stakeholders. But for the time being, let’s celebrate the victory in California for what we believe it is: A harbinger of better things to come!