Banking and cash management are one of the cannabis industry’s greatest obstacles to growth. Most cannabis companies must operate exclusively in cash, which creates tracking and security issues for the companies and their investors.
As a result of the lack of access to banking systems and the cash intensive nature of the industry, investors must conduct meticulous due diligence on the cash management practices of any potential target. It is vital for investors to ask the right questions.
The author gives some eye-opening stats on marijuana business and their difficulty gaining access to traditional banking services. Even companies with ancillary services which do not “touch the plant” have surprising difficultly getting bank accounts.
It’s clear from speaking with dispensary operators that many of them lack a robust method of tracking their cash and accounting for it’s origins. This lack of oversight only increases the difficulty of achieving banking compliance or attracting investors.
Businesses need to be meticulous in tracking their money, which can be difficult in an all cash business. This is important not only for paying taxes and keeping business records, but also for raising capital. Investors should conduct financial due diligence on a company, and businesses cannot comply with these inquiries without proper and accurate tracking.
Not tracking their cash also increases the dispensary operators risk of theft.
Contact us today to learn how we can help secure and track your cash.