Banks Stand to Gain Billions from Marijuana Industry Loans
A new report estimates that banks could generate over $2 billion in revenue from loan interest payments from the marijuana industry by 2035. The report, conducted by CTrust, Whitney Economics, and Green Check Verified, projects that the state-level marijuana market will require between $65.6 billion and $130.7 billion in growth capital for new businesses and to refinance existing cannabis companies over the next decade.
As the marijuana industry continues to expand, it is expected to balloon from $28.8 billion in 2023 to $87 billion by 2035. To meet this demand, the number of licensed operators is projected to nearly double to 40,000. This growth will require significant funding, which banks are likely to capitalize on.
Currently, banks are reluctant to work with state-licensed marijuana businesses due to the federal illegality of cannabis. However, if Congress passes legislation to specifically protect financial institutions that work with the industry, this could change. A bipartisan bill to achieve this goal has moved through a Senate committee, but its prospects for passage remain unclear.
The report aims to educate financial institution lending departments on the risks, rewards, and opportunities of working with the marijuana industry. It also highlights the need for more financial institutions to participate in the industry, which could accelerate its growth.
While the prospects of federal reform are uncertain, the report’s findings suggest that banks have a significant opportunity to capitalize on the growing marijuana industry. As the industry continues to expand, it is likely that banks will play a crucial role in providing the necessary funding for its growth.
In related news, the Congressional Budget Office (CBO) recently released a financial impact assessment of the Secure and Fair Enforcement Regulation (SAFER) Banking Act, which predicts a likely increase in federally insured deposits from cannabis businesses by billions of dollars once those protections are put in place. However, the prospects of moving the bill this year remain uncertain, with lawmakers working to keep the government funded amid a contentious presidential election.
Ultimately, the report’s findings suggest that banks have a significant opportunity to capitalize on the growing marijuana industry, and that federal reform could play a crucial role in unlocking this potential.
