It can be difficult and confusing for an international cannabis company to determine the best way to engage in banking in the U.S. We know that because it is even confusing for domestic marijuana and hemp companies in the U.S. to determine whom to bank with.
Banking is not limited to traditional large international banks. Credit unions, many of which are confined to specific states or to specific areas of certain states, were among the first financial institutions to offer banking services to cannabis companies. Along with credit unions and bankers, payment processors and payment software companies are also good resources when trying to find the right banking institution because they work with many.
Smaller banks are generally not comfortable doing business with a foreign business because they do not have the resources to conduct international “KYC” (know your customer due diligence required of U.S. banks), but we have worked with some smaller U.S. banks that specialize in the cannabis industry and even in the international cannabis industry. For some banks, a payment to or from a place like Hong Kong always raises flags in the internal systems, and some are prepared to deal with that complexity while others are not.
Larger international banks would be more likely to be willing to help you open a U.S. bank account. For instance, HSBC has locations in Washington, California, and New Jersey, as well as Hong Kong and Singapore, so it would be well situated to conduct the required KYC due diligence on an Asian-based company in order to help you open a U.S. bank account.
I recently spoke with a representative at HSBC in the U.S. to ask two questions, whether international companies could: (1) open a U.S. bank account from Hong Kong or Singapore or (2) open a Hong Kong or Singapore bank account and receive payments at a U.S. branch of HSBC. The answer to both of those questions was no. In order to open a U.S. account at HSBC, you would need to form a U.S. subsidiary.
It is possible that HSBC and other larger international banks could be satisfied with a foreign company directly registering to do business in the U.S. without forming a U.S. subsidiary. It would be worthwhile to reach out to several larger international banks with U.S. branches to further explore their requirements. It is always worth your time to reach out to smaller cannabis-centric banks and service companies that help vet cannabis clients for traditional small banks and credit unions. I have spoken with some smaller cannabis-centric banks that also specialize in international cannabis clients and do not require any foreign individual to come to the U.S. to establish an account. That service is helpful regardless of Covid travel restrictions in place.
A payment software company I recently spoke with works with many banks, and at least one of those banks in the U.K. will provide a foreign company with a U.S. bank routing number so that U.S. based customers can make payments to that U.S. account. After payment is made, the UK bank requires 3-5 days to transfer the payment to an account abroad.
This particular structure was focused on a business that utilized credit card payments. You would need to pay a 3% credit card processing fee, which would significantly reduce your sales margins, and the bank would charge a per transaction percentage fee, as well. In some states you can charge the 3% processing fee to your buyers, so this may remain a viable option for you.
Lastly, I need to flag the issue of U.S. immigration for non-U.S. citizens who are somehow involved or thinking about getting involved in a U.S. cannabis marijuana business, whether from their home country or while you are in the U.S. My colleague Akshat Divatia wrote a cautionary blog post discussing how involvement could cause foreign individuals to have significant problems with USCIS (U.S. Citizenship and Immigration Services) and USCBP (U.S. Customs and Border Protection). In that post, Akshat wrote:
Even a foreign national who has never consumed marijuana could be declared inadmissible under the INA [Immigration and Nationality Act] based on his or her involvement in a [U.S.] legal cannabis [marijuana] business, either as ‘a knowing aider, abettor, assister, conspirator, or colluder with others’ or ‘an illicit trafficker’ of a controlled substance.
In short, if you are a non-U.S. citizen and think you want to get involved in any way in a state-legal U.S marijuana business, and if you have any plans on entering the U.S., you should consult with an immigration attorney before you come to the U.S. and before you engage in any U.S. marijuana business activities.
For previous posts in this series, check out the following: