U.S. cannabis companies are at a big disadvantage to their Canadian counterparts when it comes to banking. Opening a bank account is something that consumers likely take for granted, and yet when it comes to the cannabis industry, it presents a big challenge. Due to money laundering and other drug laws, big banks often keep a safe distance from cannabis companies and don’t allow them to open up accounts.
While there are some exceptions, it remains a big problem for the industry in the U.S. and it all stems from marijuana still being a Schedule I substance. Bloomberg notes that even Canadian banks are wary of getting involved with U.S. pot companies, even though many are listed on the Canadian Securities Exchange.
As a result, many companies have to carry large sums of cash. Not only is this dangerous and creates a lot of risk, but many cannabis companies have to spend a great deal on security-related costs.
One security company, Helix TCS, Inc. (OTCQB:HLIX), has seen explosive growth. Just as cannabis companies have been producing record sales, Helix been doing very well itself. In its most recent quarter, The Company saw its revenues climb by 189% year over year. And the company expects that to continue as it’s working on managing the “unprecedented growth of the industry expected in 2019 and beyond”
While it’s good news for Helix, it’s a bad sign for the cannabis industry as security services are a big part of their operations. More than they would be in other industries.
Relief Coming for Cannabis Companies?
The good news is that there is progress finally being made on the issue. Recently, the House Financial Services Committee voted in favor of passing a cannabis banking bill that would help reform the cannabis industry. The bill would effectively allow financial institutions to do business with cannabis companies that are operating legally within their local State laws without fear of punishment for doing so.
It’s likely still weeks away from happening, and it’s by no means a guarantee. While odds are it’ll have strong support and pass the Democrat-controlled House, the battle will be in the Senate where Republicans have control. However, with marijuana continuing to make progress, even in Republican States, there might be increasing pressure for the bill to progress.
The Secure And Fair Enforcement Banking Act has 152 cosponsors. And while that’s a lot of support, the danger is that two cannabis bills made it this far last year only for them to not even make it to the House floor. Those were only related to research and were far less impactful than the banking bill is.
Could This Be the First Step Towards Marijuana Legalization?
Many are looking at this marijuana banking bill as a big first step toward eventual legalization of marijuana. The federal government has kept its stance fairly consistent on marijuana thus far. And while it’s turned a blind eye to State laws, allowing cannabis companies to operate, that’s about all that it has done up to this point. Allowing banks to do business would be significant progress for the industry and would signify growing acceptance of the industry by the federal government.