Help Me With Sign California Banking Credit Memo

Help me with industry sign banking california credit memo

now if you're interested in starting and operating a cannabis business chances are that you probably run into some difficulty when opening up a bank account for your company now there are several reasons and a whole variety of reasons and why banks won't take your cannabis money and for good reason if they take your dirty cannabis money then it can put their entire portfolio of assets at risk so just ask yourself would you risk hundreds of billions of dollars in assets just to take a cannabis business operators small 2.3 million dollar deposit I mean probably not just the risk is just way too high and this is both frustrating and dangerous for you as a cannabis business owner because you're dealing with a lot of cash and that opens up the door to fraud bookkeeping mistakes in potential security issues now while states have legalized cannabis which is federally illegal and has created this kind of murky area of how policies are actually being guided and enforced so real quick let me give you some background on how they actually got to this great area in cannabis banking but before I do I need to let you know that the information contained in this video is meant for guidance purposes only and not as professional legal or tax advice and further it does not give personalized legal tax investment or any business advice in general so with that out of the way let's hop right into the history of cannabis banking so when the US states started to actually legalize medical marijuana US Attorney General James M Cole issued a memo directing US Attorney's on how to handle the new state laws the problem has and continues to be that cannabis is still illegal at the federal level however with US states passing laws to legalize it within their respective territories the problem of infringement of voters and state rights comes into play so by issuing this memo which is properly known as the Cole memo referred to as the Cole memo Attorney General Cole addressed the issues that stem from having state laws that legalize federally illegal substances basically the memo memo actually indicates to prosecutors and that the law should be enforced and focused federal funds only on those cannabis businesses and operators they're in conflict with the state law so if you're playing within the bounds of the state law you should be okay by the Cole memo and this memo played a vital role and represented a significant shift within the federal government in reassuring how to use federal funds when enforcing the law under the Controlled Substances Act so you're probably wondering well where do we go from here and how do we navigate this gray area well I sat down with Derek Davis the CEO of green growth CPAs to get a few tips on how to successfully navigate cannabis business banking now it's important to note that Derek has worked with dozens of companies probably even more than that by this point then help them understand this nascent industries complex regulations so let's get into some of his recommendations and help you navigate this murky area now first have a discrete incorporation name right we see many clients who have incorporated their business when they come to us under names like the date cannabis or dank greens are delicious weed and it's like you know we have those names they kind of sound cool but those are brands and they're not great from a banking perspective it's like red flags everywhere okay so be sure to be mindful of the naming convention of your company and how it might be interpreted by these banks and regulatory industries so opening a bank account for your cannabis business isn't strictly legal but it does fall into again this great area that the banks may overlook if you open a general business account under a discreet name so over the last year more and more banks have been open to working with cannabis businesses which that's a great plus so make it easy as possible for a bank to abide by these federal banking regulations by using a name that doesn't rise raise any red flags so consider using like your initials or some kind of general name in the attack on the word industries or company Corporation Group Limited just something that's not does not have the cannabis or weed or 4/20 in the name all right next you should open two different bank accounts to keep your cash flow under control now the first account can be dedicated to all the cash deposits coming in from the business well the second account can be dedicated to paying your credit card bills and any other business expenses this second account is usually it works without a problem and it looks like normal money in normal money out towards paying any normal operating expenses and taking care of transactions however it's important to recognize that it's no it's not unlikely that that cash deposit account is going to be flagged by the bank for the high rate of cash deposits and the high amount of cash deposits so keep that in mind that's all making two accounts to separate things out and if this happens it's possible that the bank will file what they call an SAR which stands for suspicious activity report and you should be prepared to show all the documentation of your permits from the state and the city your licenses and expense reports if asked for this now the most important part of maintaining the two separate accounts is not to mix your business and personal expenses this is a big no-no in business accounting so don't do that your receipts have to be kept in absolute perfect order right and this is why it's important to work with an accountant who can help you build infrastructure and policies to help create and maintain a bulletproof paper trail all right this is really really important so don't commingle your funds third is build a relationship with your bankers now don't think of banking as a simple transaction just some money and up you know thing you have to do but instead look it as a partnership or a relationship with the people that are operating these businesses ok the bank manager the tellers and everybody in between because personal relationships go a long way in banking especially when it comes to people who actually write those essay RS which are suspicious activity reports right these reports are submitted to financial crimes Network the FinCEN and this can increase the ink you know the banking costs for those banks and actually serve your cannabis business accounts it's just so a mess for everybody around no one likes doing paperwork so usually when those costs go up a bank is simply just gonna pass them down on to the clients of the cannabis based business or even generally to every other clients so that means you have to pay a premium for your bank account so build a good relationship and minimize the cost in the future even potentially minimizing the headache all together of an SAR again this whole process of the SAR can be avoided by establishing a personal relationship again with the tellers the managers the security guard and everybody in between you know provide them with enough confidence in you and your business by being as transparent as possible with your financial stability the permits the licenses and overall legitimacy of you as a business owner remember cannabis regulations on banks were initially to set up to stop money laundering and major drug cartels and not to start like to stop small legal cannabis businesses so by proving you're a contributing member no member of the community of the banking community of your city's community and keeping your financials aboveboard with your bank you may be able to avoid you know someone actually filing a report that can actually drain your bank account and all this mess that comes around okay it's just a big big headache that you just want to avoid so focus on the relationship finally update the name on your credit card statement so in the state of California a business can actually register under what they call a fictitious business name when applying for a commercial cannabis business license alright and when that business name is something innocuous you know you want to do that it helps to avoid any scrutiny on your credit card statements from anybody that sees it you know whether it's you know vendors or clients you want to be sure that all the name and contact information shows up for the company on the statements that they don't mention anything that has to do with cannabis or weed or 4/20 okay again keep it keep it clean all right because when a customer and clients purchase something from your cannabis business or want to engage with your cannabis business services right there Bank gets access to your merchant name and everything else that comes along with that so you know you don't want them to scan it by some yo machine or whatever that's gonna be and find the keyword cannabis or weed right so if there's disputes and anything goes on you don't want anyone draw a red flag so hopefully if the customer sees all this general information the client will you know be more likely to reach out to you directly instead of the bank who actually may terminate or call another bank because banks are friends they will call each other and say hey there's a company called weed company 4/20 that's charging our client you know fifty five dollars you should look into this account so you know minimize that risk and make a name that's actually you know not something that has weed in it now this is not a foolproof setup but just some considerations to get you up and going forward so successfully navigating cannabis business banking means being smart and resourceful on how you actually Bank so spend the time and the effort to actually legitimize your cannabis business keep it compliant with local and state laws pay all your taxes keep your account straight and get to know your bankers and grow your chances of navigating this use gray area very successfully and don't forget this is not a transaction it's a relationship that you're building from day one all the way until you exit out of this industry now hopefully this video has brought you some value and gave you some context onto how cannabis banking actually is working in this gray area so if you actually need some help with cannabis banking or some finance needs or accounting then get in touch with green growth CPAs by reaching out to us via our website at green growth CPAs com or give us a call at eight hundred 676