Cannabis businesses may not be able to work publicly or even in private with the top banks and investors of the world, but the small banks are ever ready to work hand in hand with cannabis businesses.
Looking at the cannabis industry from the surface, it looks like the possibility of the industry banking like other commercial companies might not be visible as the biggest supporter of legislation that would liberalize rules (U.S Representative Ed Perlmutter of Colorado) for cannabis banking has announced his retirement.
Although, the number of unions and state banks investing in the cannabis business has increased tremendously. A lot of companies have been established mainly to help grow the cannabis industry, some companies provide software to banks that help them deal with the regulatory burdens of working with cannabis companies.
Earlier than now, no bank was willing to loan any cannabis business cash for business expansion, however, with the help of 420property, a lot of cannabis-related business was able to get by.
The Unwillingness Of Banks To Issue Out Loans
The majority of banks are not willing to give loans to cannabis businesses because cannabis is illegal at the federal government level. The credit-card networks follow the federal government law regarding cannabis, hence cannabis companies now have to run their basic operation on cash, an operation such as paying employees as well as buying inventory, which gets a lot difficult to carry out.
A large sum of companies that help banks do business with cannabis companies usually experiences strong growth within a short period of being in business.
These companies include but are not limited to the following:
- Following Green check verified: this company may offer software to banks to help them deal with the federal regulatory burden regarding cannabis. In 2021, they grew at the rate of 270% and now work with over 100 banks and credit unions.
- Shield compliance: this is also a company that helps banks or credit homes do business smoothly with the cannabis industry. This company also helps bank grow as well; as the cannabis business they are in business with grow the bank itself grows
- Dart: this company started in 2019 with just one cannabis client, but at the moment the company now works with over 150 cannabis companies. The CEO reported that they have more than doubled the clientele within the last six months.
- Valley National Bancorp: valley national Bancorp has recently launched a payment app for the cannabis business.
As much as few of these companies like 420property are publicly working with cannabis businesses, only about 700 depository institutions work with cannabis companies. This estimated number might not be completely accurate, as this number will include companies that only work with the cannabis business on a temporary basis.
How Companies Avoid Federal Regulations
As much as companies like green checks have programs or software that can help you avoid federal regulations risks, not all risks can be avoided by them. According to the memo from Visa, there have been uncertainties around the careless ATMs at dispensaries.
There have also been limits on deposits for small financial institutions, this helps these institutions to ensure they are adequately capitalized as well as making sure they don’t have too much exposure to cannabis to avoid being shut down in case the federal government wants to close down the cannabis business.
It is said that cannabis banking is a lucrative business to venture into, you will face some challenges and of course, put in a lot of extra work. Many clients have an attractive financial profile which is also a bonus in cannabis banking. Most of these clients are high-net-worth individuals or in some cases people with a series of businesses.
According to a recent poll, 62% of U.S registered voters said they don’t support the legalization of cannabis, even for medical use.
It was also reported that cannabis compounds were found to prevent covid infection during a laboratory study, although it hasn’t been scientifically proven correct, there is a high likelihood that cannabis compounds prevent the infection of covid.
With new variance springing up now and then, if cannabis compounds can work they will be saving a lot of human life and scientists will be able to work on a cure once it stops spreading. If cannabis companies will be used to curb the spread of covid, there should be an approved dosage as well as usage.