California’s New Banking Bill Does Little To Help The Cannabis Industry

Last week, California Governor Gavin Newsom (D) signed a handful of cannabis-related bills into law. Among the biggest changes are updates to the state’s banking laws, and while overall positive, the potential of AB 1525 is severely limited.

As anyone in the industry already knows, cannabis professionals have long struggled to gain access to banking and other financial services for their businesses. AB (Assembly Bill) 1525, signed last Tuesday by Gov. Newsom, removes any penalties previously imposed on banks for working with legal cannabis companies.

In his signing statement on the banking bill, Newsom directed state cannabis regulators to establish rules meant to protect the privacy of marijuana businesses that seek financial services, urging that data be kept confidential and is used only “for the provision of financial services to support licensees.”

“This bill has the potential to increase the provisions of financial services to the legal cannabis industry,” Newsom wrote in a signing statement, “and for that reason, I support it.”

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Very Little Help

Newsom isn’t not wrong, this bill definitely has that potential, but it remains only that until cannabis becomes legal at the federal level. Regardless of state laws, banks, which are federal entities, have been hesitant to work with cannabis clients because the plant’s Schedule 1 status.

For reference, a Schedule 1 narcotic is categorized that way because there is a “high risk of abuse and no recognized medical value.” Despite the decades of research in other countries or the fact that medical cannabis is accepted in 33 states already. It’s also worth mentioning Cocaine, which has some anesthetic properties but is known for its high propensity for abuse, is categorized as Schedule II. Alcohol and tobacco aren’t scheduled at all. Yes, it’s the ultimate hypocrisy.

But regardless of our opinions on the subject, the takeaway here is that, with cannabis being a Schedule 1 narcotic, exchanging money for a cannabis business put banks at risk of getting charged with federal money laundering.  

“Until cannabis itself is taken off the dangerous substances list, and the DEA is no longer willing to seek forfeitures for anybody dealing with this substance, the majority of banks are still going to stay away” says Chris Garcia, buyer for Berkeley dispensary Hi Fidelity.  

The Cole Memorandum

In 2013, the Cole Memorandum was issued U.S. Deputy General James Cole. This was to deprioritize the enforcement of these types of laws against state-licensed and completely legal cannabis businesses. In 2014, The Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of the Treasury, issued guidance on how banks could work with cannabis businesses. 

However, in 2018 then-Attorney General Jeff Sessions, a known opposer of any type of cannabis reform, revoked the Cole Memorandum. Although FinCEN state that the established cannabis industry guidelines will remain in effect, most banks are aware of and uncomfortable working in that financial grey area.

Final Thoughts

The cannabis companies that do choose to operate within it have to submit extensive reporting and pay astronomical fees, and even then, most financial institutions will only work with large, well-established companies. According to Tom DiGiovanni, CFO at Harborside Collective, there are roughly 60 U.S. finance companies that actively work with the cannabis industry.

FinCEN reports that as of September 2019, 563 banks and 160 credit unions provided some form of banking services to marijuana-related businesses; although how much service they are willing to provide is incredibly variable.

CLICK HERE to read the full text of the CA AB 1525

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U.K. High Street Banks Shun The CBD Industry

Cannabis Entrepreneurs have expressed their frustrations at erratic financial and regulatory systems that are failing businesses, customers and patients.

One of the main issues U.K. CBD businesses currently experience is with the poorly functioning banking system. While the situation there is not as drastic as the U.S., where some employ security companies to ferry cash to suppliers, it is still a running sore for many.

Speaking the the Cannabis Investors Forum in London Mike Dobson, the CEO of U.K. firm CannaBliss, elaborated on the difficulties he encounters.

Not One For The Banks

He said: “CBD banking is difficult, It’s too great a risk for U.K. High St banks. I’ve sat down with a regional manager, at one the leading banks, and they are fully aware of the whole situation, but are too worried about the ramifications.”

Jon-Paul Doran, CEO of U.K., cannabis cultivator Eco Equity agreed that banking is an obstacle most encounter, describing the situation in the U.K as ‘a joke’.

One panelist recounted in a discussion on ‘Cannabis Entrepreneurship’ how his business had been rejected by Forex, how it had taken 26 weeks for him to secure a basic account and how he had to establish a separate subsidiary company, unconnected to cannabis, to perform transactions.

Whilst it’s lawful to sell CBD in the U.K. entrepreneurs say the banking compliance officers’ balk at any connotations with cannabis – which is illegal. Consequently, their conservative nature makes them congenitally averse to anything perceived as risk – something they perceive that may come back to bite them at a later date.

Hair Falls Out

Geoff Miller, CEO and founder of private equity firm CannFi Group, says institutional financial compliance officers’ ‘hair falls out at mention of cannabis’. This conservative approach is also prevalent in other areas of the CBD and cannabis industry says Tony Fowler, the founder of the O’Shaughnessy Drink Company.

He was referring to the torturous U.K. cannabis growers’ licensing regime, and how its regulations stipulate for the destruction of cannabis flowers. He also called for stricter regulations on the sale of CBD products in the U.K. 

“I cannot wait for it,” he said. “People are coming into the industry with a Gung-Ho attitude; making all sorts of wild claims about their products and they don’t give a damn about the long-term credibility of the industry. This is an amazing industry, with great future potential and we are in it for the long haul, but some just don’t care and are in it simply for the dollars.”

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Nearing finish line, fight for cannabis banking bill shifts to the Senate

Advocates are hopeful that a bill that would allow the financial sector to finally serve cannabis businesses could head to President Trump’s desk by the end of the year.

The House in a strong bipartisan vote last week passed the Secure and Fair Enforcement (SAFE) Banking Act, which would allow banks and financial institutions to work with cannabis businesses. The bill now faces an uncertain future in the Republican-held Senate, with little time left on the legislative calendar and Congress already distracted by funding fights and the House Democratic impeachment inquiry into Trump.

But supporters see growing momentum for the legislation and are hopeful they are nearing the finish line despite challenges. The unusual coalition of financial sector lobbyists, progressive lawmakers, law enforcement officials and cannabis businesses backing the bill cheered the House vote as building momentum for the Senate.

“A strong bipartisan outcome in the House last night means that we have a better chance of getting the Senate’s attention,” Terry Holt, a spokesman for National Cannabis Roundtable and a partner at HDMK, told The Hill after the 321-103 House vote, which saw 229 Democrats, 91 Republicans and one Independent back the bill.

“Because the authors in the House were able to work together in a bipartisan way, the bill did improve to the point where we feel like it can reach the next stage.” Industry groups have long pushed for legislation on the issue.

Banks and credit unions have largely avoided serving cannabis firms because of the legal limbo between federal and state laws. Cannabis is illegal under federal law, but 33 states have legalized medical or recreational use of the drug. Any financial firm that lends to, finances or holds money for a cannabis company or its employees could face steep federal penalties, even in states that have legalized the drug.

Advocates for legalization and a financial services sector eager to tap a fast-growing industry have united behind the SAFE Banking Act. The bill would prohibit federal regulators from penalizing banks or credit unions for serving cannabis businesses that comply with state laws. It’s a top priority for a cadre of powerful financial services lobbying groups, including the American Bankers Association (ABA), the Independent Community Bankers of America and the Credit Union National Association.

The focus is now on the Senate Banking Committee and its chairman, Sen. Mike Crapo (R-Idaho), who has pledged to take action on the issue. While Crapo is personally opposed to marijuana legalization, he told CQ last week that his panel will consider the SAFE Banking Act or a similar bill “as soon as we can.” Supporters of the bill cheered Crapo’s pledge.

“Chairman Crapo indicated he wants to get a cannabis banking bill marked up by the end of the year, and we anticipate it will be similar to the SAFE Banking Act. This week’s historic bipartisan vote in the House undoubtedly builds momentum for Senate action,” said ex-Rep. Carlos Curbelo (R-Fla.), a strategic adviser for the Cannabis Trade Federation. But there are still questions about the depth of GOP Senate support.

While Republicans have eagerly advanced other bills to ease financial sector regulation, GOP senators have shown little interest in grappling with the controversy over cannabis. Only two GOP senators attended a July Banking panel hearing on the bill: Crapo and Sen. Cory Gardner (Colo.), one of only five Republican co-sponsors of the Senate version of the bill.

“It is really important to see what Chairman Crapo proposes,” said a financial services lobbyist advocating for the bill. “We don’t know where his head is on this,” the lobbyist added. “We’re very appreciative of his interest and his support and finding a resolution, but the devil’s really going to be in the details.”

Bill supporters have taken steps to win over Republican backing, in particular from Senate Majority Leader Mitch McConnell (R-KY). The House version included a measure to ease regulations on hemp businesses, a crucial industry in McConnell’s home state of Kentucky. McConnell, who could make or break the measure, helped secure a provision to lift federal penalties on hemp production in the 2018 farm bill.

But McConnell remains a wild card. The Senate leader has also spoken out against legalizing marijuana and called cannabis hemp’s “illicit cousin.”
A spokesman for McConnell declined to comment. Another question mark is President Trump, who has not addressed the issue.

The bill’s supporters, though, say GOP senators will be motived to take action to address the split in federal and state laws and the legal limbo faced by banks. “There is a growing sense of urgency behind resolving the cannabis banking problem because it would greatly improve public safety and increase transparency into the rapidly expanding state-legal cannabis industry,” Curbelo said.

Advocates note that cannabis businesses often deal in cash because they don’t have access to banking. Curbelo said he was confident lawmakers would decide that “this industry deserves the same access to banking services as all others.” Randal Meyer, executive director for a cannabis coalition, Global Alliance for Cannabis Commerce, also touted the SAFE Banking Act to Republicans who don’t want to legalize cannabis.

“The SAFE Banking Act does not legalize cannabis, it solves a narrow and specific public safety and policy question,” Meyer said. But the bill also faces opposition from groups who see it as a step toward legalizing marijuana nationally.

“We’re foolish to think this is the end to the marijuana industry, this is the beginning. To them, this is legalization by the back door because it allows institutional investors to market and promote marijuana, which is their dream,” said Kevin Sabet, former White House Office of National Drug Control Policy adviser and CEO of Smart Approaches to Marijuana, a group opposing legalization.

“We think that banking would be a handout to drug cartels who will exploit and expose U.S. financial systems to their end,” he added. “I don’t think the Republicans want to be the party of transnational criminal organization.”
Still, financial industry groups say they intend to prioritize the legislation this fall and are pushing the Senate to act.

“We believe that the SAFE Banking Act provides a solid foundation,” said James Ballentine, ABA’s executive vice president of congressional relations and political affairs.

“If it were to become law today, it would be extremely helpful.”

This story was originally reported by SYLVAN LANE AND ALEX GANGITANO at The Hill.

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High Demand for Cannabis Industry Brokers and Investors

Cannabis venture capitalists and investors are in high demand at the moment, and the need for them will only continue to grow.

As anyone in the cannabis industry already knows, getting a loan or any kind of funding can pose a challenge. Due to the federal regulations against cannabis, banks are often wary of giving out loans for these types of businesses, regardless of how organized and profitable your business proposal may be.

Backers who support the industry and are willing to help you accomplish your financial goals are a valuable asset for any business. Fortunately, word is getting around about what a wise move it is to invest in this industry. Private stakeholders make great returns and can quickly see massive profits. Even Wall Street investors are dipping their feet into the cannabis industry.

Application and Loan Process

Cannabis business owners need funding for a gamut of items including inventory, payroll, taxes, new hires, advertising, real estate, expansion, and so on. Because the turnaround time for profits from cannabis businesses are so fast, they usually only need to borrow capital for a short period.


Private lenders can generally provide the funds quickly and frequently. The application process is usually quite simple and you’ll normally receive a decision within 24 to 72 hours. Remember to have a few things handy such as the loan application itself, a valid form of identification, your social security number, and the last six months of bank statements. Also, make sure to include a detailed business proposal to help the lender better understand your needs.

If you’re approved, you can have your money and be on the road to a new and exciting business adventure in just days!

Areas of Investor Interest

Knowing that the sector will continue to grow, brokers are looking to bankroll pretty much any business that’s cannabis-related. Listed below are some startups with the highest amount of investor interest.

  • medical dispensaries
  • recreational shops
  • grow rooms
  • extraction facilities
  • cannabis industry websites
  • trendy cannabis kitchens
  • head shops/smoke shops

Something Else to Keep in Mind

There’s a lot of money to be made investing in the cannabis industry. Whether you’re a business owner interested in obtaining a loan, or you’re a financier looking for a cannabis company to invest your money into, the most important thing is to know where to look.

If you’re in need of funding for your cannabis business, a reputable lender will know what you need to help make your vision come to life. If you’re looking for a company to buy into, you’ll want to make sure everything is on the level with that business. It’s imperative to always do your research before making any big business moves.

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The CBD Lifestyle Weekly Review: CBD and Meditation, CBD Water, CBD for Hair

Hemp can be used for a multitude of different, modern-day innovations. Here’s a short list of what can be made from hemp.

Plus, did you know you can use hemp seed oil to improve the look and quality of your hair? Also, if you’re trying to get centered, consider using a little bit of CBD along with meditation. And what’s the deal with CBD Water? All that and more in this week’s CBD Lifestyle Weekly Newsletter.

7 Surprising Everyday Items We Can Make From Hemp

hemp uses

For centuries, humans have been using hemp as an industrial resource. But do you know just how many modern-day items it’s possible to make from hemp? The options are nearly limitless. Things such as plastic alternatives to solve our pollution crisis, cost-efficient biofuel, sustainable denim, and even houses can all be made from hemp.

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Could Hemp Seed Oil Be The Key To Strong And Vibrant Hair?

hemp oil hair

With the rising popularity of CBD for treating things like anxiety and insomnia, there are those who also swear by it when it comes to hair care. It’s believed that CBD-infused shampoos and conditioners – which are full of vitamins, minerals, and proteins – can help moisturize both the scalp and hair follicles.

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What’s the Deal with CBD Water?

cbd water

The list of CBD products on the market today is seemingly endless. There are oil tinctures, vape juices, gummy bears and more. But have you ever heard of CBD water? Although it’s simple in theory, scientifically its quite complex. CBD water comes down to something called nanoparticles.

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Combine CBD with Meditation to Find Your Center

cbd meditation

The United States is a nation plagued by stress. Nearly 8 in 10 Americans experience stress regularly, and this can lead to a variety of serious health conditions. There is strong evidence in support of using CBD, which is known to open the mind on its own, along with meditation for ultimate stress relief.

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Senate to Discuss Business Banking Access for Cannabis Industry

cannabis banking


While the Republican party has traditionally held an anti-cannabis stance, the Senate committee just scheduled a hearing to discuss business banking access for cannabis companies. Cannabis is a hot topic of discussion this year and with elections coming up soon, you can expect politicians on both sides of the fence to be scrambling to find solutions for all these industry grey areas.

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What’s the Difference Between Cannabis and Hemp?

cannabis hemp

With the legalization of cannabis across many states in the U.S., along with the 2018 Farm Bill which legalized large-scale cultivation of industrial hemp, there’s a lot of confusion differentiating between cannabis and hemp. Even though they’ve been categorized the same for decades, they’re each extremely unique.

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