Banks are Denying Loans to Legal Cannabis Industry Employees
The financing troubles of cannabis business owners are being passed down to their employees.
The legal marijuana industry has been plagued with financial challenges from day one. These challenges typically come about because banks and credit companies often refuse to work with anyone in the cannabis industry.
Basically, it boils down to this: cannabis is illegal at the federal level, regardless of state laws. As a result, most banks and credit companies view doing business with the cannabis industry as too risky.
At this point, it’s no secret that this creates a number of challenges to marijuana businesses. Most immediately, it forces them to operate as cash-only enterprises. This complicates things like payroll and introduces new security needs.
But what about the employees of those businesses? Turns out, they also struggle getting financing in their personal lives.
Cannabis Employees Often Denied Loans
In many cases, even working at a legal cannabis business is a red flag to finance companies. Put simply, a large number of banks and credit companies don’t want anything to do with money from the cannabis industry—even if it’s 100 percent in line with state and local laws.
Obviously, this would include an unwillingness to work with cannabis businesses. But it also includes an unwillingness to work with cannabis employees on an individual basis. Banks and credit companies simply do not want anything to do with weed money.
This can often become a big challenge for employees of marijuana businesses. For example, Colorado Springs Independent recently reported on a couple incidences of banks refusing loans to marijuana employees.
One Colorado woman works at a medical marijuana dispensary in Colorado Springs. She had better credit than her friends who were qualifying for mortgages. So she decided to apply for a loan, hoping to buy a home.
But when banks found out where she works, they refused to give her a mortgage. To get the loan, she eventually had to find a way to state that she was “self-employed” and then have her dad co-sign.
That same article also described a legal marijuana grower who couldn’t get a loan to buy a car, simply because he works in the cannabis industry.
Similar accounts have come out of other weed-legal states. For example, a woman who works at a dispensary in Bend, Oregon originally received approval for a financing plan to buy a new car. But after the dealership realized where she worked, they revoked her plan.
Workarounds Can be Difficult and Expensive
As a result of all this, marijuana employees often must find workarounds to qualify for loans. This can include getting co-signers or finding ways to fudge their paperwork.
Of course, these aren’t really solutions, since they carry their own sets of risks and difficulties.
In most cases, the only other option is to spend tons of time and resources tracking down the rare bank or credit union willing to work with the cannabis space.
But even if an employee can find such an institution, they typically have long waiting lines for cannabis workers. On top of that, these banks and credit unions often charge additional—and sometimes hefty—fees for anybody in the cannabis industry.
For the time being, there don’t seem to be any permanent solutions in view. The only real fix is to make cannabis legal at the federal level.
If that were to happen, then banks and credit companies would theoretically have no legal grounds on which to refuse serving the cannabis industry, including both marijuana companies and employees.