COVID-19 is having a dramatic impact on our lives, businesses, and the banking industry worldwide. As our local communities and the financial institutions that serve them respond to the shock waves caused by the spread of this virus, it hardly feels like the right time to be talking about cannabis banking.
Yet, as we’ve conferred with economists, finance experts, and looked closely at the market data, we have formulated a perspective on the cannabis banking opportunity that we’d like to share with you in hopes that it helps support your short- and long-term planning.
First, we see this financial shock as more like the disruption caused by 911 than the 2008 financial crisis. While pressure to attract new sources of low-cost deposits will wane momentarily, we continue to see these deposits being a driver of bank profitability. Diversifying portfolios and increasing these deposits today will protect future profitability as the economy improves.
Second, the current crisis shines a spotlight on the urgent demand for banking services for legal cannabis businesses. The lack of access to banking and financial services has always been a major obstacle for the industry. Now, this sector’s ineligibility for federal coronavirus economic relief has intensified the conflict between state and federal policy. More than ever before, legitimate cannabis businesses need access to lending and other financial services.
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