Shedding the Shroud; The Waning Reputational Risks of Banking Marijuana

In November 2016, Oregon based firms LT Public Relations and DHM Research conducted a survey analyzing the reputational risks of banking marijuana. In another blow to cash’s position as the cannabis king, the survey concluded “a strong majority of [the public] approve of banks and credit unions offering financial services to the legal cannabis industry.” In fact, most “see a partnership between financial institutions and legal marijuana businesses as desirable.”

Public safety was a key concern for those surveyed. 81% of respondents cited “a lack of access to banking services and the resulting dependency on cash, [which] make marijuana business targets of crime and violence” a “very good” reason for banks and credit unions to serve marijuana businesses. Conversely, most respondents viewed federal regulations as a “poor reason” to deny financial services to the marijuana industry.

The survey also found that the reputational risks of handling marijuana clients are “largely fictional.” When asked what they would do if their bank or credit union began serving marijuana businesses, 81% of respondents indicated they would keep their accounts “without concerns.” Only a miniscule number of respondents indicated that knowing their financial institution serves marijuana clients would negatively affect their impression of the institution. Support for marijuana-friendly financial institutions was strongest amongst millennials, as 88% of survey respondents under 35 viewed the marijuana industry positively.

Though approval of the marijuana industry soared amongst those surveyed, big box stores like Walmart, the adult entertainment industry and pharmaceutical, oil and tobacco companies did not fare nearly as well. Disapproval ratings for financial institutions serving these businesses doubled, and sometimes quadrupled, those for cannabis complaisant financial institutions.

As the nation continues to embrace marijuana, financial institutions must open their vaults to pot profits. To ease the expensive and timely task of performing due diligence on marijuana clients, banks and credit unions can rely on third party platforms like PayQwick. These platforms have been helping banks in Washington State accept marijuana clients without worrying about these clients’ compliance or exposure to money laundering. Once thought unimaginable, the changing attitude toward marijuana and third party platforms tailored to facilitating marijuana commerce prove marijuana businesses are bankable.

California Here “Weed” Come, by the Billions

California Here “Weed” Come, by the Billions  You may have heard it before, but the great and most populous state in the nation is poised to generate 4.5-5 BILLION annual retail sales within just a few years of its launch.  Yes, that’s Billion with a capital ‘B’ and that’s also more revenue than the entire nation’s legal cannabis industry.

California’s Proposition 64, called the Adult Use Marijuana Act (AUMA) lays out some groundwork for the state’s regulatory system and also creates a business tax on both cultivation and retail sales.

As with other states where recreational marijuana is legal, opportunities abound for plant companies, cultivators, retailers, manufacturers and all sorts of other ancillary businesses like tech ventures and cannabis attorneys.  With no residency requirements, out of state entrepreneurs will certainly flood California’s gates.

The medical marijuana licensing in the state is happening now after the governor and lawmakers created the Medical Cannabis Regulation and Safety Act (MCRSA) that took effect in January of 2016.  The rollout of this newly regulated medical marijuana industry ‘will set the tone for the implementation of the adult use industry under the Adult Use Marijuana Act’.

The state is already seeing businesses emerging and seeking expert advice in order to meet compliance and regulations of the state.  There seems to be more of a proliferation of apps as the technology concept in the non-cannabis world can also apply here.  Many culinary companies seeking to enhance your gastro experience.  Food products, cannabis event planning, and food pairings are popping up in northern California.  California based companies with seed to sale tracking systems are going to become essential as the state is requiring that type of compliance.  And there is already a National Cannabis Bar Association for those new cannabis attorneys.

With so much work to be done in developing these statewide regulations, officials do not see recreational stores to open until mid 2018.  In the meantime, it is suggested that those aspiring business owners should grab a medical marijuana license now if they ultimately want a state medical or adult use license.  Vertical integration will not be allowed unless it was already existing and grandfathered in before 2015.  The unsettled nature of the regulatory framework may also make it difficult for entrepreneurs to attract investors at this time.

Despite the uncertain nature of California’s adult use regulations, no one has any doubt the golden state will be worth its weight.