When our company, Apeks Supercritical, started making botanical extractors for the emerging legal cannabis market in 2012, we didn’t anticipate the financial challenges.
We didn’t think it was an unusual or risky venture. We don’t directly deal with cannabis, so we merely saw ourselves as a small manufacturer, and as a veteran-owned business, we expected even more credibility. But the end use of our product in the legal cannabis market proved to be an issue.
The first bank account set up by our founder, Andy Joseph, was quickly shut down. Even his personal account was closed. Other banks proceeded to welcome our business — knowing our line of work — only to reverse course and close our accounts within months.
Now, many banking relationships later, we’re well versed in the fear these financial institutions have around emerging industries and dynamic regulatory environments. We also understand this industry and the businesses that work directly or indirectly with cannabis will continue to emerge, scale and grow.
When handling your finances, choosing a bank and scaling:
- Budget, budget, budget. Budgeting is the first, second and third most important thing. All companies should track credits and debits, whether through Excel or something more formal, and every small business owner should know how much is coming in and how much is going out.
- Be prepared to spend. In our experience, banks charge higher interest rates and fees for businesses deemed to be riskier. Be prepared to spend a little extra, at least in the early years. You’ll need to take some risks to grow your business — and that takes money.
- Do your research. Before you close a deal or open an account, scrutinize the details. Ask about whether there is a monthly limit for cash deposits, whether the bank provides an armored truck for cash collection and how withdrawals can be made.
- Have several banking partners. Comparison shopping is important. It can be beneficial to open accounts at several institutions. Then, if one account gets shut down, you can start operating out of the next one.
- Know when to seek help. There will be a time when you’re unsure of the answers to financial questions. “Do I need to write that off? Is that capital? Do I need to depreciate that?” That’s to be expected. It just means you could benefit from professional assistance.
Our business came to a crossroads when we wanted to set aside money for an R&D budget. We hired a consultant who met with us once a week to go over the books, and he ended up as our CFO. Consultants are a cost-effective way to ensure you’re on the right track, while bridging the gap to a full-time financial executive.
Although we’ve come a long way since our early days, I believe there is still more to learn. But if you’re engrossed in the financials every day, it gets easier.
Whether you’re in an emerging market, one that deals with a lot of cash or a small business wanting to improve your financial situation, be sure to consider these lessons ahead of time. You’ll be glad you did.
Kristen Joseph is the director of quality at Apeks Supercritical, which designs, refines and manufactures botanical oil extraction systems utilizing subcritical and supercritical CO2. In her leadership roles at Apeks, Kristen strives to uphold her motto: Provide excellent quality while offering the best possible customer service. Directing the customer service team since 2013, Kristen understands the importance of meeting customer expectations — providing them with what they need, when they need it.
