Legalized Cannabis and Considerations for Bankers

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Manage episode 213693320 series 1767659
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As more and more states legalize the use and sale of marijuana, more and more banks are finding themselves caught between the pincer of local needs and federal law. Recreational adult use of marijuana is now legal in nine states plus Washington, D.C., with prescription use permitted in another 31, plus 15 more that allow low-THC cannabinoid products like oils. "It's going in only one direction," says Don Childears, who leads the Colorado Bankers Association in the first state to legalize recreational cannabis.

Cannabis is now a $1.5 billion industry in Colorado generating $250 million in state revenues, Childears says, but the conflict between state and federal laws is creating a ripple of lost growth opportunities and public safety problems. "Without banking marijuana businesses, we have the public put at risk and we have real complications for governments," Childears says. "

While he doesn't see cannabis as a major market for banks -- about 20 banks in Colorado are quietly serving marijuana businesses, he says, with their regulators' knowledge -- Childears emphasizes the need for clarity on the issue. He also discusses several factors banks need to consider in states that have legalized cannabis, whether they want to bank marijuana-related business or not, including reputation risk, governance issues, insurance coverage, and the treatment of hemp versus marijuana.

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