Banking access and compliance with varying legal state regulations remains a top concern for cannabis companies, but as stalls continue on SAFE Banking, operators are forced to innovate in order to keep their businesses compliant and financially strong.
As NORML shared through a poll by Morning Consult, 65 percent of Americans “support allowing cannabis businesses to access banking services (e.g., checking accounts, business loans) in states where cannabis is legal,” and 68 percent say Congress should pass legislation now.
A Benzinga survey has found that 72 percent of cannabis operators are identifying that a lack of access to banking solutions is the biggest problem faced by the industry. The new report from Whitney Economics found that only 42% of respondents were profitable, who cited market volatility and taxes as the worst concerns after banking.
Why is Cannabis Banking Access So Important?
There are roughly 11,000 banks and credit unions in the United States, but only 7% of them – around 700 banks – will work with cannabis companies due to complex regulations and the perceived risk. Cannabis-related businesses, including smaller businesses that do contracting with cannabis companies, are often prevented from accessing banking services, loans and insurance due to the perceived risk of their business from traditional banking institutions. It can lead to robberies, issues with payroll and keeps the industry “underground” with compliance challenges, ultimately stifling the growth and professionalism of the industry.
Innovation is a hallmark of the cannabis industry, with new advancements being driven from consumer needs. Luckily, there are some options available. Founded in 2018, Confia is one such solution whose platform works almost exactly like a bank account, taking care of all the compliance transactional complexities in real time – benefitting both businesses and consumers, and they’re taking some bold steps to level the playing field for access to financial services.
“I believe affordable access to banking is a business owner’s right, not a privilege for the few,” said Confia CEO Mark Lozzi. “We designed Confia to act as a bridge between the two worlds of the established financial system and the cannabis industry. A lack of banking access is not only a public safety concern due to the high instances of crime and violence for the cash-based operations, but also limits the innovation, growth, and professionalism of the industry as a whole. We’ve proven ourselves as a trusted partner for cannabis and high risk operators, and have focused on inclusion.”
How Social Equity Programs Help Create Equality
As the leading financial services provider for the cannabis industry, Confia has partnered with two industry giants to “share the wealth” among the nation’s most deserving businesses. By leveraging their audiences and established organizational reputations, both NCIA and Eaze Momentum help further Confia’s goal of bringing affordable, compliant financial services to the cannabis industry without the predatory practices typically seen in the industry.
Eaze’s Momentum business accelerator elevates Confia as the preferred financial services provider for their members. Confia will provide Momentum participants and alumni with preferred financial services terms, access to financial planning resources, and banking fees of just $250 per month. In addition, Confia will financially sponsor Momentum’s grant program and host financial services workshops throughout the year.
“We have developed a social equity program as a direct way for us to impact and contribute toward creating equality for all in the industry,” Lozzi continued. “We hope to make a difference through our program, but we recognize it will take collaborative action and engagement from every stakeholder in the cannabis industry in order to make a long term sustainable impact.”
Similarly, NCIA’s Diversity, Equity, Inclusion Program (DEI) will oversee and validate all social equity applicants through its Social Equity Scholarship Program (SESP). NCIA operates one of the nation’s largest social equity initiatives, and all of NCIA’s verified SESP members will be eligible for Confia’s financial services platform for a fee of $250, which is an overall 50 percent discount.
Creating a level playing field is a top concern for Confia, which believes that cannabis industry leaders have a duty to create equality. As Lozzi explains, “We are in the early stages of the cannabis life cycle, and as one of the most watched emerging industries in history, it cannot afford to leave any business or leader behind.”