Banking Activity Increases In States That Legalize Marijuana, Study Finds

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As the marijuana business struggles with finding the best banks that are willing to work with them, a new study revealed that states with marijuana legalization have more increase in banks dealing with the marijuana businesses.

Banking Activity Increases In States That Legalize Marijuana, Study Finds 3

However, this doesn’t imply any relationships between the state-level marijuana reform and increased activity. According to different researchers that legalize cannabis, the Federal Deposit Insurance Corporation (FDIC), from 2011 to 2016, the banking transactions were higher in states that have already legalized cannabis compared to the non legalizing states. The risks of penalties are still considered by the federal regulators for working with such businesses that deal with federally controlled substances in their business.

According to the author of the research, even though the uncertainty may result in cautious behaviour and economic activity, there is still no sound evidence with the cannabis law and the banking industry. According to their results, there was an increase in deposits and loans after the legalization of recreational cannabis in the state.

While the increase is completely pragmatic considering the legalization, there are still some banks taking risks to work with cannabis businesses. The cannabis industry is now growing more than ever and is actively launching and growing different operations throughout the countries. However, the question of the banks would want to decide on taking marijuana clients still exists. According to the study authors, they have two different possibilities. The first one is the risk of regulatory uncertainty will not affect the banks, and the second is the willingness of the banks to accept deposits and loans. The banks are either unconcerned about the potential risks or simply optimistic over the regulations and legalization that is ongoing in different countries. In recent years, this legislation has been approved more than five times in the U.S House of Representatives. However, things are still stuck with the Senate. The overall analysis shows that banks reporting marijuana accounts have been stable since 2019. Either way, banks are actively working with the marijuana businesses to increase the economic condition of the countries.