#282
Cannabis Finance

Published:

Apr 06, 2019


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Published:

Apr 06, 2019


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Legalization of cannabis has been gaining steam in the U.S., with ten states and Washington D.C. having passed full legalization. Moreover, 33 states have legalized comprehensive medical cannabis programs. The fledgling market now exceeds $10b in annual sales.

Despite the rising tide, access to traditional banking services remains a bottleneck on the industry. Marijuana remains a Schedule 1 illegal substance under the federal Controlled Substances Act. As a result, banks and payment processors are unwilling to work with cannabis businesses due to fears of violating federal money laundering and substance regulations.

The industry continues to operate on cash – creating numerous security and logistical headaches for businesses in the space.

However, new legislation has been proposed in Congress that might alleviate the pain. The Secure and Fair Enforcement (SAFE) Banking Act would provide safe harbor to banks working with cannabis businesses that are legal on the state level. While the bill seemingly has broad support from regulators, law enforcement, and financial institutions, it will have to survive a lengthy legislative process in order to truly change the market.

Should the regulation pass, there could be a renewed surge in the nascent industry. You can be sure the cannabis businesses will be pleading their case with lawmakers…

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