Canadian Banks Welcoming Legal Cannabis Business
With recreational cannabis becoming legal in Canada on October 17, there are a number of key point s to consider when it comes to the process, and how the new laws will be implemented. One such consideration is banking. Canada's cannabis businesses have a massive advantage over their American counterparts, as federal banks in the US are still barred from working with marijuana producers. The plant is still illegal under U.S. law, major banks have been loath to do business with the industry, even in legal cannabis states.
U.S. Treasury Department data show a slow increase in the number of banks and credit unions maintaining accounts for marijuana businesses, with 411 reporting such accounts last spring. But many of those institutions don't provide full-service banking, making it tough for businesses to get loans.
"The major Canadian banks were slow to warm to this"
said Chris Barry, a Seattle-based marijuana business attorney who handles industry transactions in both countries for the law firm Dorsey and Whitney. He said smaller independent banks, investment banks and brokerage firms got the work started.
"That has pretty much dissolved as a problem, the majors are coming around to participate in the market."
This means that the federal banks in Canada are going to open up their doors to the newly-legalized industry. This will make the businesses which produce and sell marijuana much safer, in terms of their investments and profits, as well as not having to essentially hide their money under the mattress.
Canada is doing legalization right, and the US could learn a thing or two if they ever get around to federally legalizing it themselves.