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Marijuana and High-Risk Banking: What New Cannabis Businesses Should Know Upfront



Marijuana and High-Risk Banking

It surprises many merchants to find out that their banking institution has declared them a high-risk business. The result of this classification is potentially devastating to a company. A high-risk status can eliminate the ability to accept credit or debit cards as well as access to essential banking services such as checking accounts. This high-risk classification makes it difficult to receive payments from customers and a challenge to pay vendors.

Businesses which the banking institution or processor believes pose a risk, such as industries involved in medical marijuana, online gambling, or telemarketing, receive a high-risk label. High-risk merchants also include online retail stores, trip advisors, and life coaches. While the documentation to prove the success of your business exists and is available, your banking institution is liable for the risk involved with your accounts. For many banks, even though this is all legal revenue, they are unwilling to accept the risk associated with these businesses, and they choose what chance they take.

Starting a Cannabis Business

One of the fastest-growing industries in recent years, the marijuana industry suffers heavily from this classification. Although 29 states allow medical cannabis, for most businesses involved in the enterprise, it is impossible to get a checking account.

Raising capital for this high growth industry has also become an issue with traditional lending sources cut-off. Funding for growth in the marijuana industry is unlikely to change anytime soon. The current U.S. administration has stated that it will take a much different approach to drug policy, particularly the marijuana industry, than the previous, which choose not to interfere in states that had legalized the drug.

High-risk industries have a banking issue which can block them from accepting and making payments, as well as forcing them only to take cash. Many states have begun to recognize this problem and have started to address it with Hawaii becoming the first to implement a cashless system for medical patients. Cashless payment systems and encrypted currency technology is a step other states should take to ensure the continued growth of high-risk enterprises like the cannabis industry.


Berke, Jeremy. “The marijuana industry is in a ‘catch-22'.” Business Insider, Business Insider, 14 May 2016.

Borchardt, Debra. “Hawaii Was Slow To Roll Out Medical Marijuana, But Fast To Go Cashless.” Forbes, Forbes Magazine, 13 Sept. 2017.

Herzberg, Aaron. “Lending money to pot businesses is a high-risk move: ‘This is not for the faint of heart'.” Los Angeles Times, Los Angeles Times, 19 Dec. 2016.

Joe personifies dedication in writing and when you read his unique, well-researched content this will become very clear. With a passion for social and environmental issues, and first-hand experience with over 40 years experience in business, finance, and marketing, we are honored to have his CBD and cannabis insights and contributions. Mr. Mielcarek is semi-retired, so he finds joy in digging deep to sift through the facts to deliver a well polished and professionally packaged article for readers to consume, digest and understand.

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