Comprehensive independent research and financial analysis of the emerging legalized cannabis industry

Navigating the Shoals of Cannabis Banking Regulations




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Twenty-nine states and the District of Columbia have passed laws legalizing marijuana for medicinal, recreational, or dual permissions, yet marijuana remains classified as a Schedule 1 narcotic. Therefore, federally chartered and insured financial institutions have generally refrained from transacting business with any known entity that derives its revenues from cannabis related activities. As the industry continues to evolve, the clear and present risk of transacting business in “cash only” continues to supervene as many businesses are not able to accept debit or credit cards, write checks nor make (or receive) payments electronically. These limitations plague not only entities that “touch the plant” but also ancillary businesses and service providers.

Investors continue to be concerned that their interests may not only remain vulnerable to existing legal impediments, but also that they could face an additional threat if the federal government were to claim superseding law enforcement jurisdiction over state mandates.

We believe that until such time as the federal government ends prohibition or passes legislation to change existing laws that the cannabis industry will be impelled to seek out temporary solutions to facilitate banking transactions. It is hoped that some of these work-arounds will be suited for longer term viability and will (or continue to) stand the tests of regulatory scrutiny.

Accordingly, there will remain some level of ambiguity as to whether a true cannabis banking solution exists in the marketplace today. There is no one answer and we think there will continue to be a patchwork of alternative offerings.

This investor briefing lays out the issues inherent in cannabis banking and provides an analysis of:

  • Marijuana Related Business (MRB) Activities
  • Some of the financial institutions that bank MRBs
  • Viable banking solutions in the absence of changes to federal law
  • Common methods of consumer payments for cannabis
  • Concentration risk associated with the State of Colorado’s dispensary deposits (a case study)





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