Cannabis Banking Financial Network Don’t let the frigid temperatures discourage you—spring is on its way. That means it’s time to prepare for your outdoor garden. Here’s all you need to know about buying cannabis seeds as you plan for the grow season.
Is It Illegal To Buy Marijuana Seeds
If cannabis flower is federally illegal because it contains Tetrahydrocannabinol (THC), are cannabis seeds legal because they don’t? It’s a fair question that many people have asked and, while the answer is “no” federally and “it depends” by state, there is an active legal cannabis seed trade occurring every day in the U.S. – and it is rapidly growing. While the legal questions evolve and new legislation surfaces in state capitols and Washington D.C., there is cash tied to the sale of cannabis seeds in need of banking.
Is it legal to sell cannabis seeds?
Cannabis seeds are illegal to sell across state lines due to the ongoing federal prohibition against cannabis and cannabis products. However, depending on state law, consumers may be able to purchase cannabis seeds legally from a breeder, dispensary, or other cannabis business – even if they don’t have a license to sell cannabis products that contain THC.
Cannabis seeds find themselves in a legal grey area because they don’t contain any THC – when a cannabis product contains 0.3% THC content or less, it is considered legal since the signing of the 2018 Farm Bill. However, they remain federally illegal to buy and sell. In states where cannabis is legal, cannabis seeds could sometimes be bought and sold within state borders by licensed businesses only, depending on state law. State laws governing the sale of cannabis seeds can vary from state to state.
Can retailers who sell cannabis seeds get a bank account?
For THC licensees who also sell cannabis seeds, banking is available as it would be for other activities that fall under the scope of that license. In other words, a dispensary would have little trouble adding cannabis seeds to their inventory if they already worked with a cannabis-friendly bank.
However, unlike THC licensees, there is not a clear federal regulatory framework on how to bank money derived from state-compliant cannabis seeds sales from non-THC licensed operators. As a result, this sector of the legal cannabis industry comes with a great deal of uncertainty and risk, every banker’s least favorite combination.
So, for example, a garden shop stocks all types of seeds, including cannabis seeds, which become a substantial portion of the shop’s business. Unlike a licensed dispensary, this garden shop does not deal in other cannabis products, and yet cannabis seeds remain a significant percentage of overall revenue. The regulations that bank examiners use for THC licensees doesn’t necessarily apply to the garden shop and so many bankers remain uncertain how to approach this type of situation (and therefore tend to avoid it).
In this way, cannabis seeds are more like CBD products or Delta-8-THC: largely unregulated from a banking perspective.
The difference between CBD banking and cannabis seeds banking, though, is that while the U.S. cannabis seeds market is expected to eclipse $1.5 billion in total value by 2027, the American CBD industry already drives more than that in sales each year. More niche sectors of the industry like the cannabis seed trade and Delta-8 THC distillates face an even steeper uphill battle in securing compliant banking and merchant processing services than CBD businesses.
That’s not to say banking isn’t available for these sectors. However, bankers generally tend to be less informed about cannabis seeds than THC licensees or even CBD businesses. At any time, a bank could take a closer look at sectors like cannabis seeds or Delta-8-THC and decide the uncertainty is too great and the business opportunity too small (relative to broader markets like CBD) to take the risk – at any time, a bank could choose to terminate these accounts and suspend merchant processing services.
Cannabis seeds businesses might be legal in your state but remain federally illegal – and without a THC license, it’s not exactly clear to bankers how to compliantly manage your account. However, unlike THC licensees, federal bank examiners have produced no real guidance on how to bank profits earned through the purchase and sale of cannabis seeds. While THC licensees handle a federally illegal product, bankers have guidance, and therefore more certainty, on how to bank them in a compliant manner. There is no such assurance when it comes to cannabis seeds businesses.
This has led many cannabis seeds businesses to mischaracterize their operations to their bank, posing as an agricultural company under some obscure name and withholding information about cannabis-related operations. Not only does this carry significant business consequences, it appears that law enforcement is cracking down on fraud in cannabis banking and payment processing. This approach is not only obsolete but puts your business at a competitive disadvantage. Yesterday was the best time to transition to transparent, compliant cannabis banking, but right now is the second-best time.
How to find a stable banking relationship for cannabis seeds businesses
Cannabis entrepreneurs know few things are certain and those that are won’t be for long. The same is true for cannabis banking, but you can take certain steps to improve your chances of finding, retaining, and maintaining a stable relationship with your bank.
The first and most important step is to identify a cannabis-friendly bank and approach them in full transparency. That can be easier said than done. Many cannabis-friendly banks don’t openly advertise the fact that they work closely with the industry. Even if they embrace the industry and the business opportunities that come along with it, many remain cautious about the optics of being associated with a federally illegal product.
That’s where banking networks like Fincann come in. We’ve been doing the hard work in the trenches for years, forging relationships with financial institutions that are ready and willing to work with the legal cannabis industry, including cannabis seeds businesses. As of April 2021, Fincann’s Cannabis Banking Financial Network™ offers compliant cannabis banking and merchant processing services for every sector of the industry in all 50 states.
What banking services are available to cannabis seeds businesses?
Once you and your new bank have been introduced, including a full review of business operations and financials, you’ll know you have a banking partner that understands and supports your business. And, if you’re in need of merchant processing services, there are several legitimate, compliant options available to all sectors of the cannabis industry: merchant processing accounts, “PayPal-style” e-wallets, closed-loop and loyalty cards, high-profit ATMs, and ACH-based apps and transfers.
Merchant processing accounts support in-person debit transactions, allowing customers to make cannabis purchases using their checking account and PIN number. ACH transfers support an online payment functionality for e-commerce stores. Customers simply input their routing and account number and confirm their payment to checkout online. Both methods are 100% legally compliant and transparent with the facilitating bank.
Cannabis banking made better with Fincann
There is no longer any need for a business in any state or sector of the legal cannabis industry to lie to their bank or use illegal payment processing workarounds. With banking networks like Fincann and payment processing solutions like merchant processing accounts and online ACH transfers, cannabis businesses have effective, legal, and straightforward options. The future of the cannabis industry is legal and transparent; don’t fall behind, call Fincann and transition to better cannabis banking today.
How to Buy Cannabis Seeds Legally
Buyer Beware: Purchasing Cannabis Seeds Online Is Illegal.
by Dianna Benjamin – March 14, 2019
Don’t let the frigid temperatures discourage you—spring is on its way. That means it’s time to prepare for your outdoor garden. Here’s all you need to know about buying cannabis seeds as you plan for the grow season.
Until Federal Prohibition is Lifted, Buying Cannabis Seeds is Illegal
Let’s set the record straight. As of now, you can’t buy cannabis seeds legally. That’s even true in states that have legalized cannabis for medical and recreational use. Until Federal prohibition is lifted, the specter of national anti-cannabis law hovers over every single cannabis transaction. It’s just that some cannabis transactions are more likely to be prosecuted by the Feds than others.
So when a friend of mine told me that her favorite Colorado dispensary purchased its cannabis seeds from Florida, I was perplexed. Large inter-state cannabis exchanges are exactly the kind of transactions that would get the wrong kind of attention. Sure, cannabis is legal for adult personal use in Colorado and for medicinal use in Florida, but it remains illegal at the national level. That means that the export of cannabis seeds from one state to another, regardless of each state’s cannabis laws, can result in federal criminal prosecution.
Actually, that means that any transaction involving cannabis is technically illegal as far as the US Drug Enforcement Administration is concerned. There was a time when the Federal government announced that enforcing cannabis laws in cannabis-legal states would not be a priority. Then former Attorney General Jeff Sessions rescinded that statement making it clear that enforcing prohibition was still at the top of the DEA’s agenda. Even though Sessions is gone, it isn’t clear that the new AG won’t feel the same way that Sessions felt about weed.
For Now, It’s Probably Okay to Buy In-State Cannabis Seeds.
Despite this state vs. Federal government kerfuffle, you’re probably safe to buy cannabis seeds from a source located in your town or state if you abide by your state and local government’s regulations. But state laws vary (and some municipalities have even stricter rules than their states do) so don’t make any assumptions. Check out the rules published by your state’s cannabis regulators.
You have a few legal options if you’re obtaining your cannabis seeds locally.
Dispensary. This is the safest option, but it is also the most limited. Dispensaries do sell cannabis seeds, but you’re likely to only have a few options to peruse since they have an array of products other than seeds to get off their shelves.
Friend. If your buddy has been growing cannabis and keeping their seeds, ask them if they’ll donate a batch to you. Keep in mind that it is illegal for them to actually sell the seeds to you unless they have a cannabis retail license. You’ll also want to make sure that your state and municipality allows this kind of exchange.
Cannabis festival. Lots of vendors at these kinds of events sell cannabis seeds for publicity and to make some fast cash. If you want to have fun, check out a huge variety of producers, and possibly bag some free goodies, definitely check out a cannabis festival.
Marijuana farmers market. Find out if the local producers come together to sell their cannabis seeds. Make sure that the event is registered with the local government, though.
Buying Cannabis Seeds From Out of State Can Get You in Trouble.
Say you live in a state that has legalized cannabis, but you want to buy cannabis seeds online through an out of state dealer who produces in a state/country that has also legalized cannabis. Is this lawful? The answer is, definitely not. Yes, that is a very popular way of buying cannabis seeds, and it’s one of the best ways of getting high-quality cannabis seeds from a seed bank. Vendors justify these online sales by claiming that they are selling the seeds for novelty purposes rather than for cultivation. Also, it’s tough for the feds to actually intercept online transactions because that kind of enforcement is expensive, and it is rare that the average consumer is purchasing enough cannabis seeds for it to really be worth it.
Even so, inter-state activity is under fed jurisdiction, so buying cannabis seeds from out of state online is indisputably subject to federal prosecution. It is illegal to transport cannabis from one state to another through mail, so there isn’t even a legal recourse through which to receive an out of state purchase.
Let’s try another scenario. You just flew to Colorado for a weekend getaway and bought cannabis seeds you want to take home with you so that you can start your own grow. You live in Washington state. Is this a legit plan? Sorry, but no. It is illegal to carry cannabis on an airplane . The situation isn’t better if you drove because it is also illegal to carry cannabis across state lines. States and the Feds are on the same page there—state laws prohibit their residents from taking weed over their borders.
Realistically, people break all of these rules for a variety of reasons. They’re frustrating. They’re counterintuitive. Folks just don’t even know they are the rules because of how silly they are. Even so, they are the rules, and it won’t be pretty if you get caught breaking them. The minimum penalty for a first offense includes a prison sentence of up to 5 years and a fine of up to $250,000.
Here’s the tea. If your cannabis purchase requires the seeds (or any cannabis product) to cross state lines, you’re breaking an outdated and ineffective law that, unlike a local purchase, is likely to be prioritized by the feds. If you buy your cannabis seeds from a local licensed vendor, however, you’re at least abiding by your state’s laws, and it is highly unlikely that you will have to deal with the US DEA.