According to a recent story published by Forbes, California cannabis entrepreneurs will earn $5.2 billion in revenue in 2018 once recreational use becomes legal at the start of the year. That also means the state of California should collect about a billion on taxes alone. That’s a huge windfall. One big problem … no banks will touch the marijuana industry because it’s still federally illegal.
“As a ‘schedule one’ substance, cannabis is categorized to be as harmful as heroin and banks risk losing their federal charter if they work with cannabis companies,” per the Forbes article. “Financial institutions need to go on record with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCen) when they establish a relationship with a known Marijuana Related Business, and Karnes estimates that just 5% of all banks have done that. He believes that fewer than 1% of all banks in the United States are currently working with cannabis-related companies.”
But there’s good news for the “budding” industry. New technology start-ups are on the case and working with banks on compliance, transparency and record keeping. However, it’s a slow race to the finish line. That means many of the business will operate with cash for the time being. Despite the specter of the federal government looming large in the background, it doesn’t appear California’s promising economy will take a hit in the meantime … “Vangst, a recruitment firm specializing in the cannabis space, says the number of people working full time in legal cannabis grew from 43,374 people in January to 47,711 in September.”
Read more here.
