FT News Briefing Banking on cannabis
Sep 2, 2021
Discover YouTube's massive growth in music streaming, boasting 50 million paying subscribers. Learn about the dire truck driver shortage in the U.S. and the push for more foreign workers in the industry. Dive into the complex banking landscape for cannabis companies, facing significant challenges due to conflicting state and federal laws. A niche financial sector is emerging to support this burgeoning market, revealing intriguing shifts in how these businesses navigate their financial hurdles.
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Cannabis Banking Challenges
- The U.S. cannabis industry, worth roughly $20 billion, faces banking challenges.
- Despite state legalization, federal laws restrict traditional banking access for cannabis businesses.
Legal Discrepancy
- Cannabis companies are caught between state and federal laws regarding banking.
- Federal law makes banks deem the compliance risk too high to offer banking services to these companies.
Early Cannabis Financing
- Early legal cannabis businesses relied on self-funding, friends, family, or niche investors.
- Many operated cash-only, increasing risks like theft, due to lack of banking access.