Is the banking industry going to pot?

As more states liberalize marijuana-use laws, banks and credit unions wonder if they can and should capitalize on a huge new market by providing essential financial services to dispensaries and other pot-related businesses. Here's what they can learn from those financial institutions that have pioneered banking in the cannabis industry.

If you had any doubt that legal medical and recreational marijuana and related derivatives have become a very big business in the U.S., consider that a recent edition of Marijuana Business Magazine ran 154 pages. The issue was stuffed with advertising to serve the needs of marijuana retailers, medical-use clinics, processors, and producers. The goods marketed range from packaging and processing equipment to branded manufactured candies infused with cannabis to marijuana consulting services. There’s been an explosion in entire categories of companies and fledgling trade associations serving the business, as what was once a completely illegal trade has gone legal, or, at least, been decriminalized, in more and more states.

There’s already consumer research to draw from — including categorization of pot-using consumers into “personas.” New Frontier Data, an analytics firm that concentrates solely on the cannabis industry, breaks the customer base into nine segments, including “traditional lifestylers,” “discreet unwinders,” “social opportunists,” and “infrequent conservatives.” The top ranking reason for consuming marijuana-related products in New Frontier’s study was relaxation (66%) followed by pain management (42%) and finally by “making boring things more interesting” (19%).

No longer just a back alley business funded by the mob and other criminal elements, marijuana-based companies have become an industry watched by professional stock analysts, including some from BofA Securities and Canadian Imperial Bank of Commerce, and talked about on The Motley Fool, Seeking Alpha, and Yahoo Finance.


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