Seven states so far have legalized cannabis for recreational use and medical marijuana is legal in 21 other states, but federally-funded banks cannot serve the needs of cannabis-related businesses, because it is still an illegal drug under federal law. Industry experts, however, contend that the banks have been allowing these businesses to deposit money or access some credit card services, on a “don’t ask, don’t tell” basis.
Established cannabis businesses have had long-term relationships with bankers, while newer entries to the industry are taking a multi-prong approach, so if one door closes they can go elsewhere, says Jim Fitzpatrick, founder and principal of Solutioneers, a consulting firm that provides compliance and land use services to cannabis firms.
Many cannabis-related operators conceal the true nature of their business in order to obtain banking services, says Matthew Karnes, founder of GreenWave Advisors, a cannabis research and advisory firm.
Meanwhile, real estate investors focused on