The multi-billion dollar cannabis industry in Northern California sees major problems that need to be addressed


The same practices are often already in use by the government’s track and trace system, Metrc, and it appears that rule of law could be more helpful in providing banks with an easier way to track these legal operators.

On the federal initiative, if Congress fails to act, the largest banks in the United States will continue to look the other way as their largest clients make private investments but then turn away transparent operators, widening the gap between Main Street and Wall Street.

Flickinger: There are cannabis banks that exist that support cannabis entrepreneurship. DAMA is one and Safe Harbor is another at the top. I receive emails from various payment processing companies that also help streamline financial operations.

So there seem to be ways that go beyond anything Congress may or may not do. The downside, of course, is that cannabis banking is usually very costly and makes it difficult for small businesses to participate. As wholesale prices drop in today’s cannabis market, we need solutions that are more affordable, and I think we may see other people step in with non-traditional ideas that might be useful.

From the line: Banking needs to be addressed immediately at the federal level. For this reason too, the regulated market cannot complete with the unregulated market. The cost of moving cash across the state from retailers to distributors and from distributors to farmers and manufacturers exceeds the physical cost of transferring money.

The result is that cash is slow to move down the supply chain, and when there are no options for traditional credit, it has real implications for businesses. Additionally, you pay employees to drive around paying bills in cash, and keeping records is considerably more complex.

The other major reason Congress needs to act is that cannabis companies now employ hundreds of thousands of people. It is harder to get loans on houses, cars, etc., and people are still losing personal bank accounts because they are affiliated with legal cannabis companies.

When Congress finally acts, it will also have to deal with 280E, a section of the IRS Tax Act that prevents cannabis companies from writing off normal business expenses and deducting only COGS. This tax regime results in cannabis companies essentially paying income taxes on their gross sales.

Melrod: Banking operations are very expensive and cumbersome for cannabis companies, and because of this, many small operators are forced to do all cash operations. It’s unsafe and risky. If Congress doesn’t make changes, banking will continue to be extremely cumbersome and expensive for many.

Mercer-Ingram: Cannabis banking has gotten a lot more accessible in recent years. Although Proof is happy to have a cannabis-compliant bank account, the fees are very high, but we cannot access traditional business loans, which is stifling growth.

Another big problem is that investors are struggling to invest money in cannabis due to federal illegality and banking problems. Retailers and most supply chain operators are struggling with cash logistics, which adds huge cost to business, not to mention the security risks for the public.

Legalizing cannabis at the federal level is a common sense move, and voters know it; national polls reflect strong and diverse support. We just need to see the actions of our elected officials.

States, at least 36, have so far legalized cannabis in some forms. Still, cannabis is still illegal in the federal books. What is the future of international trade in cannabis products if it continues?

If Congress doesn’t pass cannabis reform, government cooperation will likely be the only option. Lawyers and lawmakers in several states have been working on ways to allow cannabis to travel between legalized states.

However, this type of legislation would likely be prone to legal challenges. At some point there will be a change in interstate trade, be it at the federal level or between states. To be competitive, California needs to cut taxes and relax regulations. Otherwise, California will continue to lose to more lucrative states like Illinois, Massachusetts, Colorado, or virtually any other state.

States, at least 36, have so far legalized cannabis in some forms. Still, cannabis is still illegal in the federal books. What is the future of international trade in cannabis products if it continues?

Candles: Cannabis is legalized nationwide – it’s inevitable. At this point, all of the cannabis for the whole country is grown in California and exported to the rest of the country. Until that happens, small breeders have to hold out.