MILWAUKEE — The CBD industry is a booming business. According to Forbes, the industry could generate more than $20 billion by 2024. With those kinds of numbers, you wouldn't expect there would be a lot of financial hoops CBD shop owners would have to jump through. However, their business is often being rejected by big banks.
"It makes you feel like you are doing something wrong when in actuality we follow all the compliance and regulatory guidelines," Colin Plant the owner of Canni Hemp Co. in Milwaukee, said.
Even though CBD is legal, banks have a difficult time backing an industry derived from a still federally illicit substance, cannabis.
"There's so much gray area over it that they just don’t want to take the chance," he said.
TMJ4 News reached out to the bank and online payments processor Plant worked with and has not heard back from them yet.
Plant's situation is not unique. Reports of banks not willing to work with CBD shops have been reported in Texas, Kansas, and many other places across the U.S.
In Plant's situation, the banks initially worked with him. He had a business account with a major bank. However, after a couple of months of business, the bank closed his account. A few months later, the bank even closed his personal accounts too.
"Three months after that we got a letter saying they are closing all of our accounts including home equity lines, unsecured lines of credit, credit cards and another business checking account."
Not having a bank can be catastrophic for a small business. It meant he couldn't swipe credit cards or participate in online retail. Luckily for Plant, it was merely a bump in the road. He has a background in finance and was prepared for any extenuating circumstances. He had back up accounts at other banks to rely on and transfer the money to.
It's not just financing with banks that have given Plant trouble, he has learned the hard way that there are severe online advertising restrictions. One instance with Google came to mind.
"They were like, you can run this at your own risk, but you’ve got a really short window before we will basically shut down your entire google ads account.”
Facebook and Instagram have similarly strict guidelines when it comes to advertising CBD products.
"You can't advertise for vape or any smoke-able or inhalants or tinctures even. It's very restrictive," Plant said.
Despite all these obstacles Plant doesn't show any signs of stopping. The future looks bright for Canni Hemp Co. He said he is in a good business relationship with his current bank and is actively experimenting with different marketing techniques to reach a larger audience.
In fact, some of the places that initially rejected his business are coming back to him.
"Also had a number of institutions that turned us down reach out and say hey we are looking into this space now are you interested."
The CBD industry will continue to evolve as public policy and financial institutions do the same. How fast that happens is yet to be determined.
