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…
Aaron Schumm is in the catbird seat after biggest cat in the Wall Street jungle validates Vestwell - Excellent write-up by RiaBiz on Vestwell's latest $30m Series B which saw Goldman Sach's seeking out the startup for investment as the investment bank looks to make the RIA channel a market and get exposure to tech that is radically changing the way we invest. Read more
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The SEC’s token investment framework - Although nothing is really "new" regarding this weeks SEC statement about whether or not an offered digital asset qualifies as a security, The Block has pulled some interesting snippets regarding Active Participants and important considerations. Read more
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Good deep dive on how the new Apple credit card works - TechCrunch does a good job here of going beyond the basics, and answering some of the more detailed questions about how some e.g. the virtual card aspect of the card, works. Read more
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BBVA loan links interest rate to digital milestones - BBVA has sold a $350m revolving credit facility to Singapore-based Olam International whose interest rate will decline as the borrower makes progress against a set of 32 digital business milestones. Read more
Bank runs in the digital era - What happens to bank runs when banks, like everything else, become websites. The FT digs in to a report on how those risks might become more acute with the onset of Open Banking. Read more
Why Mastercard is funding the next generation of cryptographers through Girls4Tech - Mastercard is overseeing a project geared at getting middle-schoolers to learn how to code and understand cryptography, with a focus on reaching 300k girls by the end of the year where there is the biggest shortfall. Read more
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