What major challenge do cannabis businesses face in obtaining banking services?

The major challenge that cannabis businesses face in obtaining banking services is primarily due to federal regulations and banking restrictions. Cannabis remains classified as a Schedule I controlled substance under federal law in the United States. This classification creates significant complications for banks and financial institutions, as they risk facing legal repercussions, including potential criminal liability, for providing services to cannabis-related businesses.

Due to the federal illegality of cannabis, many banks and credit unions prefer to avoid any association with the industry. This leads to a lack of available banking options, forcing many cannabis businesses to operate on a cash-only basis. The absence of traditional banking services complicates basic operations, such as payroll processing, paying taxes, and managing finances.

While high transaction fees and other financial challenges can be relevant issues for some businesses, they are more secondary to the overarching barrier set by federal regulations that inhibit cannabis businesses from accessing the financial services commonly available to other industries. Lack of customers and oversupply of products, while they may impact specific businesses, do not directly affect the ability to obtain banking services.