US cannabis industry’s big problem: Too much cash

Matthew Hatcher/Reuters

Marijuana can be sold legally in 36 US states and the District of Columbia (DC) for medical use and in 15 of them and in DC for recreational purposes. But it is still illegal on a federal level, meaning most banks refuse to service the industry in case they fall afoul of money laundering laws…

With the COVID-19 pandemic and increasing legalisation driving a surge in cannabis use, the sector’s producers, manufacturers and retailers are awash in cash, adding risk and costs to the most basic business transactions from paying employees and filing taxes to finding somewhere to store their income…

Legal US cannabis sales grew 30 percent to $22bn last year, more than the $17.5bn Americans spent on wine, according to data from Euromonitor. Sales are expected to jump more than 20 percent this year…

The House of Representatives passed a bill in April that would allow cannabis firms to have bank accounts, get loans and accept credit card payments but it may not make it to the Senate because Senate Majority Leader Chuck Schumer wants to work instead towards lifting the federal ban on cannabis.

A full federal green light is the industry’s ultimate goal but it is not counting on Schumer’s pledge to make it happen by next year.

Ah, yes. Several solutions are at hand. All that is needed is decision, a vote, and implementation by Congress. And our politicians are so good at getting that part done, eh?

3 thoughts on “US cannabis industry’s big problem: Too much cash

  1. Ka-Ching! says:

    Is Amazon the spark that reignites cannabis stocks?
    In recent days, names like Cronos (CRON), Tilray (TLRY) and Sundial Growers (SNDL) have seen a pickup in purchases by amateur traders, according to analysts at Vanda Research.
    Driving much of the action is the Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act, which was reintroduced by Democratic House Judiciary Committee Chair Jerry Nadler last Friday.
    The bill would decriminalize marijuana at the federal level by removing it from a list of controlled substances and reassess previous marijuana convictions.
    “Despite the low chances that the Act is passed [in] the Senate (due to the filibuster), increasing media coverage is likely to attract the attention of the average retail investor,” Vanda’s Ben Onatibia and Giacomo Pierantoni told clients on Wednesday.
    In a blog post, Dave Clark, CEO of Amazon’s worldwide consumer division, said changing state laws on marijuana mean the company will no longer include the substance in pre-employment drug tests. The internet giant is also endorsing the MORE Act.
    “We hope other employers will join us, and that policymakers will act swiftly to pass this law,” Clark said.

  2. Buddy says:

    “More than 20 governors urge Congress to add cannabis banking to defense bill”
    “Medical and recreational cannabis sales in the U.S. were estimated to total $17.5 billion last year, but because of antiquated federal banking regulations, almost all cannabis transactions are cash-based,” the governors, led by Colorado Democrat Jared Polis, wrote in Tuesday’s letter. “Not only are cash-only businesses targets for crime, cannabis businesses are further disadvantaged compared to other legal businesses by being unable to open bank accounts or obtain loans at reasonable rates. The cannabis industry is legal in some form in the majority of U.S. states and it is too large of a market to be prohibited from banking opportunities.”

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