As the marijuana industry continues to expand, a new economic analysis finds that the capital that cannabis businesses are expected to need will translate into upwards of $2.4 billion in revenue for banks from loan interest payments over the next 10 years.
The report from 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 through 2035, which would generate anywhere from $1 billion to $2.4 billion in interest revenue for financial institutions that service them.
While it’s difficult to anticipate just how much larger the cannabis industry will become over the next decade—with multiple states such as Florida set to decide on legalization during next month’s election alone—the analysis projects marijuana sales will balloon from $28.8 billion in 2023 to $87 billion by 2035. And to meet that demand, the report said the number of licensed operators would need to nearly double to 40,000.
“The funding needed to realize this growth cannot be supported solely by friends and families,” Beau Whitney, founder and chief economist of Whitney Economics, said in a press release. “By demonstrating regional opportunities and broader market potential, the report aims to empower financial institution lending departments to help educate their boards on risks, rewards and opportunities—all in the hopes of accelerating the industry’s growth by encouraging more financial institutions to participate.”
As it stands, banks generally continue to be reluctant to work with state-licensed marijuana businesses given their product’s status as a federally illegal drug. There’s federal guidance in place that advises financial institutions on how to navigate that grey area, but so long as cannabis remains a Schedule I drug under the Controlled Substances Act (CSA), there’s likely to be continued wariness among banks looking at taking on potential cannabis clients.
It stands to reason that would change if Congress passes legislation to specifically protect financial institutions that work with the industry, but the prospects of that reform being enacted remain unclear. A bipartisan bill to achieve that goal moved through a Senate committee last year—and earlier versions have passed the House multiple times—but for the time being, the pathway to passage is murky.
“Banks have long been cautious about entering the cannabis industry due to regulatory and financial risks, though when they do, they have to rely on non-cannabis specific underwriting and due diligence,” Dotan Melech, CEO and co-founder of CTrust, said. “This report should pave the way for conversations with financial institutions to develop more informed lending partnerships with the cannabis industry.”
Kevin Hart, CEO of Green Check Verified, said the new report “is crucial for our customers, as an integrated platform of compliant deposits, account monitoring and portfolio management opens the entire industry up nationally.”
“Connected data, visibility, opportunity and managed risk are essential for building a robust financial ecosystem that supports sustainable growth in cannabis lending,” he said.
The economic report comes weeks after the Congressional Budget Office (CBO) released a financial impact assessment of the Secure and Fair Enforcement Regulation (SAFER) Banking Act that to safeguard banks that work with the marijuana market. CBO’s score of the bill similarly predicted a likely increase in federally insured deposits from cannabis businesses by billions of dollars once those protections are put in place.
CBO also scored an earlier version of the marijuana banking bill after it cleared a House committee in 2019, finding that the federal government ultimately stood to save money if the reform was enacted.
With time running short in the remainder of the session as lawmakers work to keep the government funded amid a contentious presidential election, the prospects of moving the SAFER Banking Act this year remain uncertain, however.
Sen. Jeff Merkley (D-OR), the Democratic Senate sponsor of the legislation, told Marijuana Moment last month that it’s “great” and “helpful” that former President Donald Trump, the 2024 GOP nominee, has come out in support of the reform—though he similarly said the pathway to passage in the chamber is still unclear.
Meanwhile, Sens. Elizabeth Warren (D-MA) and Tommy Tuberville (R-AL) separately challenged the idea that there’s enough GOP support for the SAFER Banking Act to pass on the Senate floor during the lame duck session following the election.
Warren accused certain Republican members of overstating support for the legislation within their caucus, while also taking a hit at Trump for doing “nothing” on cannabis reform during his time in office as he makes a policy pivot ahead of the election by coming out in support of the marijuana banking bill and federal rescheduling.
Sen. John Hickenlooper (D-CO) also recently argued in an interview with Marijuana Moment that the main barrier to getting the marijuana banking bill across the finish line is a lack of sufficient Republican support in the chamber. And he said if Trump is serious about seeing the reform he recently endorsed enacted, he needs to “bring us some Republican senators.”
—Marijuana Moment is tracking more than 1,500 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.—
Senate Banking Committee Chairman Sherrod Brown (D-OH) also recently reiterated the need to advance the SAFER Banking Act as a public safety imperative, promoting it in a video where he tours an Ohio cannabis business. In a recent interview with Marijuana Moment, he also said that “we don’t have enough Republicans, we don’t think.”
Many would like to see a Senate roll call vote on the bill before the end of this Congress—at the very least so members are forced to go on the record amid conflicting reports about whether it has enough support to reach the steep 60-vote threshold to advance to passage. But if it were to fail, some feel that setback could prove all the more damaging to its long-term prospects of success.
Separately Rep. Earl Blumenauer (D-OR), co-chair of the Congressional Cannabis Caucus, said in a letter to House Speaker Mike Johnson (R-LA) that the cannabis banking bill is one example of a measure that should be brought to the floor imminently following Trump’s statement, as well as recent reporting about unearthed audio where former President Richard Nixon could be heard conceding that cannabis is “not particularly dangerous.”
“I would suggest moving policies that, instead of further dividing us, makes a difference for the American people, including for our veterans, law enforcement, small businesses, and more,” the congressman, who is retiring at the end of this Congress, said. “It’s never too late to do the right thing.”
Whether Johnson would be willing to take the congressman’s advice remains to be seen, however. Prior to becoming speaker, Johnson consistently opposed cannabis reform, including on incremental issues like cannabis banking and making it easier to conduct scientific research on the plant.
As the marijuana industry continues to expand, a new economic analysis finds that the capital that cannabis businesses are expected to need will translate into upwards of $2.4 billion in revenue for banks from loan interest payments over the next 10 years. The report from CTrust, Whitney Economics and Green Check Verified projects that the Read More