Cannabis Storm Cash vs Credit Flow

Before the legalization of MMJ / Cannabis in many US states Cash has been king. Cash doesn't leave a paper trail. This is an "old" paradigm that has been slowing evolving as the industry catches up with traditional ways of financially operating these businesses.

Business owners that still have one foot in the Cash is king mode and perhaps trying to operate with newly available credit financing are between a rock and a hard place.

Lenders want to see the paper trail of revenue. Non-cannabis businesses have to show theirs, why would it be any different for you? Legalization means the Cannabis industry needs to meet legitimate standards of practice. So how does a business make the shift?

Here's some tips:

1 Be open to constant changes regarding banking and financing. As lenders become interested in assisting this industry, there are new innovations being created all the time. I talked to a lady in Colorado who told me she had been in business for 10 years. She knew ALL there was to know about finance services. She was very adamant and closed off to hearing anything new. The only monthly revenue documentation she had was her sales tax records.

Fact: There are now Seeds to Sales software programs to document revenue. Merchant Credit Card Accounts. Finance Trust Accounts with banking features.

2 Credit Unions are not all FDIC. Look for a credit union that is NCUA (National Credit Union Association) Be Pro Active ask an officer at the credit union their policies on working for the legal cannabis industry in your state. Don't become defensive and argumentative if they seem hesitant. Ask them why. If they say, we just cannot handle that much cash on a daily basis. Ask what daily cash amount they can handle. Ask for a chance just like any other business they help. Build a rapport as a professional and change the perception that all mmj/cannabis business are illegal or owners are unreliable stoner types. :)

Fact: FDIC banks are not saying No because of the Federal illegal drug policy. They do not want to have to deal in the higher volumes of cash. Federal Reserve made it possible for all FDIC banks only to have to keep on hand 10% of any members account. They cannot turn around volumes of cash easily.

3 Improve your personal credit score to at least 650 + or someone else in your business, spouse, partner, or associate. There are lenders that can provide unsecured loans meaning they use your credit history as an indication of repayment. Be realistic to the amount of funds you need.

Fact: There are Lines of Credit that can be revolving.

4 Work with a professional that is up to date on financial and banking changes for your industry. Accountant. Attorney. Consultant. Take their feedback to heart.

There is a standard of conduct for both mmj / cannbis businesses and the lending and banking industries. There is not going to be a separate standard for mmj / cannabis folks just because they have no paper trail. Make every effort to document and track your monthly revenue. Even if it is a little spendy right now. The cost will come down when more sign up for these services.

` Pamela Weir CCFC Red2GREEN a division of Red2Black Resources Pueblo CO