The number of financial institutions serving marijuana-related businesses declined slightly in the first six months of this year, according to federal data, likely because of COVID-19 and other factors.
But anecdotally, one industry expert said, banks and credit unions seem more willing to loan money to well-run marijuana businesses.
The number of financial institutions serving marijuana-related businesses dropped 4.7% from 729 at the beginning of the year to 695 as of June 30, according to data by the Financial Crimes Enforcement Network (FinCEN), which is part of the U.S. Treasury Department.
FinCEN listed a number of possible factors:
- Financial regulators have issued separate guidance for hemp, so those activities are no longer included in the reports.
- Some marijuana businesses closed temporarily or permanently because of the coronavirus pandemic.
- Some banks were late in filing suspicious activity reports required to be included in the federal data.
Mike Kennedy, co-founder of the Connecticut-based cannabis banking compliance software company Green Check Verified, told Marijuana Business Daily in a recent interview that he’s hearing anecdotally that more financial institutions are interested in loaning money to well-run marijuana businesses.
He said this trend is being expedited by the fact that few cannabis-related firms were able to access coronavirus stimulus funds, and marijuana businesses face exorbitant interest rates when tapping tight private capital markets.
Banks with strong compliance programs are more comfortable serving cannabis-related firms, Kennedy said.
Kennedy said he’s hearing banks are mostly loaning money for cultivation and processing equipment and some commercial real estate. But “eventually it will be for working capital and expansion capital,” he predicted.