With apologies to Ben Franklin and others, nothing is more certain if you operate a cannabis company than your need for access to banking services and insurance (FWIW, the death and taxes part is probably also the case). This is true (1) as a practical matter and (2) often a legal requirement. 

The Problem

Practically, cannabis operators need a place to deposit and keep money and need to insure the business. After all, the cannabis industry remains a largely cash business, and anyone operating a business needs to have various levels of insurance to protect against the worst case scenario.

And as a legal matter, many states require insurance as a requirement for cannabis operators. For example, Alabama’s new medical cannabis law requires “[a] letter of commitment or other acknowledgement…of the applicant’s ability to secure a performance bond issued by a surety insurance company approved by the commission in the amount of two million dollars”  (Ala. Code § 20-2A-67(d)).

But in one of the many cruel twists of fate in the cannabis industry, operators are often unable to easily access the two things they are required to have. Most of the largest and well-known banks and insurance providers will not provide services to cannabis-related businesses, particularly those businesses trading in marijuana. As we recently wrote, the reasons vary from money-laundering concerns to reputational issues to institutional inertia. 

The Solution

Would-be cannabis operators needn’t despair. There are banks and insurance providers that will offer services to cannabis businesses. To be sure, most banks and insurance companies are not yet providing services to the cannabis sector. But there are a growing number of such providers. Bradley’s cannabis lawyers regularly make introductions to banking and insurance providers on behalf of our clients.

Would-be cannabis operators should give great consideration to the need for banking services and insurance, both for practical and (often) legal reasons. And it’s almost never too soon to begin to search for those services, as the process invariably takes longer than it would for a non-cannabis business. So perhaps the final message is to be diligent but not worried – and to contact us.

Photo of Whitt Steineker Whitt Steineker

As co-chair of Bradley’s Cannabis Industry team, Whitt represents clients in a wide range of cannabis issues. In addition to providing a full suite of legal services to cannabis companies, Whitt and the Cannabis Industry team advise non-cannabis clients – from banks to…

As co-chair of Bradley’s Cannabis Industry team, Whitt represents clients in a wide range of cannabis issues. In addition to providing a full suite of legal services to cannabis companies, Whitt and the Cannabis Industry team advise non-cannabis clients – from banks to commercial real estate companies to insurance companies and high net worth individuals – on best practices for interacting with cannabis companies.

Whitt is one of the leading voices in the cannabis bar – recognized as a “Go-To Thought Leader” by the National Law Review. He has presented on cannabis issues at conferences around the country.  His work has been featured in the National Law JournalLaw360, and the Westlaw Journal. And he has been quoted in an array of legal and mainstream publications from Law360 and Super Lawyers to the Atlanta Journal-Constitution and the Associated Press.