Credit is a very important aspect of any business. Not only are loans important to getting everything up and running, but the simple act of transacting using credit cards or debit cards is important for maintaining a business with any expectation of growth in the future. Marijuana companies have been notoriously shunned by big banks due to federal laws prohibiting the use of marijuana.
Local banks are easier to pair with because they operate under the same state laws that a marijuana company does. But when a bank operates in more than one state, it becomes more difficult to abide by different sets of rules for each state. This has been a major obstacle for marijuana companies who need loans or credit for business purposes.
But Bank of America might pave the way to a simplification of operations very soon. Here’s the rub: it isn’t happening in America. Despite the name, Bank of America operates in Canada as well, the same as banks Merrill Lynch and Goldman Sachs. The latter two businesses are trying to delve into the marijuana industry in Canada too.
Expect to see the banks take it slow for now, while steadily investing in new marijuana and cannabis companies. The banks obviously hope that big governments will begin to legalize the drug for public consumption.
The investments have spurred investments for New York’s Constellation Brands and Canopy Growth in Smith Falls, Ontario.
There’s also movement on another front that might make it easier for marijuana businesses to operate like any other business: a new Congressional bill sponsored by Democratic Representative Ed Perlmutter of Colorado would weaken or remove current banking prohibitions. He said that the lack of access to digital bucks “creates a serious public safety risk for our communities.”
That’s because we’re still talking about a drug. The fact that you can only buy marijuana wish cash makes it easier for those with illegal finances to remain unnoticed.
Co-sponsor Representative Steve Stivers of Ohio said, “This bill does not currently solve the capital market issues.”
The bill is called the SAFE Banking Act, and it would ensure that banks would not be penalized for providing their services (or loans) to marijuana businesses.
Other members of Congress want to legalize marijuana completely to make the banking point moot — but Democrats who support the bill would require the votes of 10 Republicans and other moderate Democrats, which makes it nearly certain to fail. Then again, there has been recent talk of eliminating the filibuster — and doing so would make the liberal agenda much easier to push through Congress. For now, passage of either bill is very unlikely.