This article was written by Meghan Thompson and originally published by Outlaw Report.
If you’ve ever used a debit card at a Maryland dispensary, it’s more than likely that the company has a bank account opened with one of the three banks in Maryland that services the cannabis industry: Severn Bank, Bulldog Federal Credit Union, or the newest addition—CFG Bank.
Out of more than 80 different banks in Maryland, those three are the only ones that will service the state’s medical cannabis businesses. That’s because cannabis is still federally illegal and as a result, cannabis companies are typically denied traditional banking services. Financial institutions who service the cannabis industry are technically holding what the federal government still considers to be “drug money.”
Severn Bank in Annapolis was the first in Maryland to venture into the cannabis industry when sales began in 2017. It was joined by Gaithersburg-based Bulldog Federal Credit Union in 2018. Then, just last month, Baltimore’s CFG Bank became the third bank to announce they are servicing Maryland cannabis businesses.
Cannabis companies with bank accounts can accept debit cards, purchase products from other businesses via wire transfer and pay their employees directly from a bank account—services accessible to almost every other legal industry in the U.S.
In an interview with the Baltimore Business Journal in 2018, the president of Bulldog Federal Credit Union said “these people are business owners just like anybody else…they’re businesses that are just trying to serve a need in Maryland. So we want to do the same for them.”
Severn, Bulldog and CFG are all willing to open bank accounts for Maryland’s cannabis businesses, but not before charging hefty fees to accommodate risk incurred by the bank and the additional compliance legwork.
Severn Bank charges cannabis businesses $3,000 to open an account and $1,750 monthly, whereas Bulldog Federal Credit Union in Gaithersburg charges $2,500 initially and $1,500 monthly. That’s a $20,500 per year expense, at least, just to open and operate a bank account.
For this reason, 70% of cannabis businesses in the U.S. are still cash-only, and while the number of banks willing to service cannabis companies is increasing, the vast majority of banks won’t budge until cannabis is legal.
But there’s a lot of money to be made by banks who choose to service Maryland’s cannabis industry, especially considering the state’s cannabis sales hit $1 billion within three years of medical cannabis dispensaries being operational.
Exclusive offer from our sponsor:
Get daily news insights in your inbox. Subscribe