America’s Big Banks Enter the Marijuana Industry
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A Key issues facing the marijuana industry in the US states with legalized marijuana is their inability to find a bank willing to handle the money.
That is because marijuana remains illegal under federal law, and many banks have refused to open accounts for businesses in the the industry.
The country’s biggest banks: Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), JPMorgan Chase & Co. (NYSE: JPM), and Wells Fargo & Co. (NYSE: WFC) declared in Y 2015 that they did not provided banking services to marijuana related businesses.
According to study conducted on behalf of “American Banker,” out of 84 applicants to operate medical marijuana dispensaries in Massachusetts filed between June 2015 and September 2016, 29 of the businesses claimed they had accounts at 1 of the big banks or 1 of the banks’ subsidiaries.
Of that total, 17 had a connection to Bank of America.
The overall all perception is that big banks do not do business with cannabis businesses, but at least in some of cases that appears not to be the case.
What will happen under the Trump Administration remains to be seen, but Attorney General nominee Jeff Sessions has been clear that he will enforce federal law.
People in North America spent $53.3-B on legal, medical, and illicit marijuana in Y 2016. That’s more cash than Americans spend in a year at McDonald’s (NYSE:MCD) and Starbucks (NNASDAQ:SBUX) combined.
According to a new report from Arcview Market Research, a leading publisher of marijuana market research, the black market is losing ground to its legal counterpart as consumers spend more money each year on legal cannabis.
Progress is slow
The North American legal marijuane market posted $6.7-B in revenue in Y 2016, up 30% from the year before. The illicit market generated 87% of total pot sales, down from 90% in Y 2015.
The numbers suggest the legal marijuana industry is growing quickly, but it has a ways to go before it breaks the black market, which has the lion’s share of revenue.
For the year, tax collections totaled $60-M, a sizable rise above the $45-M expected by state officials at the beginning of the year.
Marijuana retailers have said in recent months that demand remains strong for their products, but sales have suffered because of tight supplies. Questions about pesticide use and changes in the permitting of retailers combined to decrease availability.
Substance use disorder (SUD) has risen with US Vets using medical marijuana for post-traumatic stress disorder (PTSD) in the past fiscal years.
From Y’s 2002 to 2014, the use of marijuana has risen 22.7% in Veteran community, according to Veterans Affairs (VA).
As of Y 2014, 40,000 Veterans with both SUD and PTSD were diagnosed with cannabis use disorder, according to VA.
There are some problems associated with the use of medical cannabis.
Physical dependence is a state that develops as result as tolerance or adaptation from the result of use of the drug disrupting the body’s biochemical balance”.
“Marijuana use by individuals with PTSD may lead to negative consequences such as marijuana tolerance,” according to VA.
Cannabis entrepreneurs, borrowing from successful retailers such as Apple (NASDAQ:AAPL) and Whole Foods, are opening dispensaries with natural light, spacious displays and open-floor plans.
With the drug now legal for recreational use in California and 7 other states, such amenities could attract an anticipated flow of new customers who are less familiar with cannabis and may be put off by the industry’s generally dingy shopping experience.