You’ve done it, you have just formed your own business. What’s next? For most, it is to open a business banking account. But think again if your business is part of the legal marijuana industry, as federal law still bans it. There are a few small banks and credit unions that offer business banking for those in the marijuana business, like in Washington state. Although the president of the United States is in favor of medical marijuana legalization we may see a crackdown from the attorney general who strongly opposes it.
Two entrepreneurs in Chicago have a goal and that is to resolve the issue. Noah Carey and Bill Erwin whose backgrounds are in finance, insurance, and risk management have created Shield Compliance to offer financial institutions and marijuana businesses entirely automating banking regulatory compliance, obvious connections between the businesses’ record-keeping methods and the reduction of the risk associated from working within the industry.
Carey and Erwin are seeking what financial institutions require to feel safe to take on this market. Carey relating to his many years of financial risk management believes that the banks and the customers want the ability to effortlessly monitor the money going through the business while meeting the meticulous audits each state has mandated for legal marijuana companies. That’s company’s software, called Shield Compliance System, provides just that.
When using SCS, the bank examines the client by comprehending the usual like cash flow, business plans and other pertinent information that is required to work together and then SCS stores this information. In the spotlight of SCS is its ability to connect to the Point of Sale systems, cash registers, and inventory systems to track every single penny going in and out of the business. Reports are then automatically generated to comply with each state’s laws.
By the system storing both bank and vendor information, everything that is required for an audit it is at the bank’s fingertips. The system also tracks permit and licensing information, if an expiration is approaching the system alerts the business keeping operations running.
“We’re working to reduce the risk for banks to get into the industry and saving them time by automating the actions they have to take to manage the relationship,” Carey said. Currently there is one bank in Chicago is using the SCS.
If banks implement the software and Shield Compliance achieves first mover advantage in the market, the benefit would be significant as no other company has resolved the banking issue for marijuana companies yet. But, Attorney General Sessions could lead the department of justice to condemn the industry altogether or the legal climate can continue in keeping banks from accepting clients in the industry.
“Reputation is everything” in the banking world, said Carey, “and banks are not ready to say they are in the cannabis business.” He soon hopes that the outlook will change.