COVID-19 is having a dramatic impact on our lives, businesses, and the banking industry worldwide. As our local communities and the financial institutions that serve them respond to the shock waves caused by the spread of this virus, it hardly feels like the right time to be talking about cannabis banking.
Yet, as we’ve conferred with economists, finance experts, and looked closely at the market data, we have formulated a perspective on the cannabis banking opportunity that we’d like to share with you in hopes that it helps support your short- and long-term planning.
First, we see this financial shock as more like the disruption caused by 911 than the 2008 financial crisis. While pressure to attract new sources of low-cost deposits will wane momentarily, we continue to see these deposits being a driver of bank profitability. Diversifying portfolios and increasing these deposits today will protect future profitability as the economy improves.
Second, the current crisis shines a spotlight on the urgent demand for banking services for legal cannabis businesses. The lack of access to banking and financial services has always been a major obstacle for the industry. Now, this sector’s ineligibility for federal coronavirus economic relief has intensified the conflict between state and federal policy. More than ever before, legitimate cannabis businesses need access to lending and other financial services.
Finally, while it seems counter-intuitive to talk about introducing new lines of business now, especially high-risk ones, it may be a good time for financial institutions to consider new opportunities to innovate. New technologies can be used to drive efficiency, automate compliance and manage operational risk, and, in this new era of social distancing, reduce face-to-face interactions – starting with the customer on-boarding process.
Here are a few resources to help you learn more about the cannabis banking opportunity:
Shield Guest Post in The Findley Reports - Is Now the Right Time for Cannabis Banking ?
We are always happy to speak with you. Please contact us at 425-276-8235; email@example.com.
Thank you for your support and commitment to our business and each other during this time. We are all in this together!
From my home office to yours,
Noah P. Carey
Founder and CEO
Shield Compliance LLC