A new economic analysis reveals that the burgeoning marijuana industry could generate substantial revenue for financial institutions. CTrust, Whitney Economics, and Green Check Verified project that the state-level cannabis market will require between $65.6 billion and $130.7 billion in capital through 2035. This influx of investment could translate to $1 billion to $2.4 billion in interest revenue for banks servicing these businesses.
As the industry expands, with multiple states considering legalization, marijuana sales are projected to soar from $28.8 billion in 2023 to $87 billion by 2035. To meet this demand, the number of licensed operators may need to double to 40,000.
“The funding required for this growth cannot solely rely on personal sources,” said Beau Whitney, founder of Whitney Economics. “By highlighting regional opportunities and broader market potential, this report aims to empower financial institutions to educate their boards on the risks, rewards, and opportunities within the cannabis industry, encouraging increased participation.”
However, the federal illegality of marijuana continues to hinder banking partnerships. While there’s federal guidance for financial institutions, the Schedule I classification of cannabis under the Controlled Substances Act (CSA) fosters caution among banks.
Congress could alleviate this issue by passing legislation to protect financial institutions working with the industry. The bipartisan SAFER Banking Act, which has cleared the House multiple times, offers such protection. Yet, its future in the Senate remains uncertain.
“Banks have been wary of the cannabis industry due to regulatory and financial risks,” said Dotan Melech, CEO of CTrust. “This report can facilitate discussions with financial institutions to develop informed lending partnerships.”
Kevin Hart, CEO of Green Check Verified, emphasized the report’s significance for the industry, stating that it could open up national opportunities for compliant deposits, account monitoring, and portfolio management.
The CBO’s financial impact assessment of the SAFER Banking Act also predicts a substantial increase in federally insured deposits from cannabis businesses. While the bill’s future is uncertain, bipartisan support and recent endorsements from former President Trump could potentially pave the way for its passage. However, challenges remain, including securing sufficient Republican support in the Senate.
