Ask TASI® Bank07.28.2023
The cannabis industry is not easy to navigate for anyone trying to provide services to businesses involved. Recreational marijuana is legal for adults in 22 states and Washington, DC, and medical marijuana is legal in 38 states, DC, and four U.S. territories (Puerto Rico, the Virgin Islands, Guam, and the Northern Mariana Islands). Despite the stalled SAFE Banking Act in Congress, which would enable the banking system to offer basic financial services to the industry, companies in the cannabis industry still require fundamental banking and financial relationships to survive.
For TASI® Bank, which prides itself on being a true maverick in the financial services industry, this challenge is one they willingly embrace.
Take it from James Addicott, a Vice President/Relationship Manager at TASI Bank.
"I can sense some tension when I, as a banker, enter a cannabis operation to discuss business. However, I quickly discovered that the people I engage with are pleasantly surprised by our approach.”
"Initially, they may have a preconceived notion of bankers as individuals in three-piece suits who feel out of place in a cannabis operation," he explains. "But within a few minutes, you can witness that perception change. We're not your traditional bankers, and for cannabis business operators, that is refreshing."
While the debate about the legalization of cannabis sales continues to be an issue in more than a dozen states, California was an early adopter of the business model that allows the product to be sold in most areas. However, like any industry less than a decade old, there are growing pains (pun intended).
Cannabis businesses face a challenging path to success due to a combination of high taxes, black market sales, and oversupply.
"We have been working with two tiers of the industry for several years," says Jesus H. Leon Guerrero, TASI® Bank Vice President/Relationship Manager. "We are continually interested in collaborating with established companies and individuals with a history in the industry.
"The industry is maturing, and its growth is tied to funding and sound business principles," he adds.
Currently, TASI Bank primarily serves two tiers of the industry, focusing on businesses that provide services and real estate to cannabis businesses. "We are working with legal and regulatory authorities to provide financing and funding to the third tier, which involves businesses directly involved in the handling of cannabis."
Guerrero, who manages the TASI Bank Southern California region, emphasizes that "the more successful cannabis businesses are one step ahead of their competitors. We are experienced in understanding their business needs, and we have found that those with strong business plans and vertical integration are well-positioned to succeed as the industry matures."
He acknowledges that providing loans to cannabis businesses is more challenging due to the regulatory environment, but TASI Bank prides itself on being a maverick and is willing to navigate the process with business owners to support their growth.
As TASI Bank has always done, it remains open to working with businesses in industries that other banks often overlook.