I withdrew $60 from the ATM when I arrived.
Fortunately, there was only a $0.50 service fee. This is how most ATMs work at the majority of Denver’s legal cannabis dispensaries. Which makes sense, since you cannot use a credit card to purchase cannabis, and certainly these folks don’t want to turn away customers.
You see, right now, legitimate cannabis-related businesses operating in the United States can only operate in cash because the banks won’t hold their money or help facilitate financial transactions. This is due to the fact that banking services fall under federal law, which also identifies marijuana as a schedule 1 substance, meaning it’s illegal to manufacture, distribute, or posses.
But …
A Billion-Dollar Industry Awaits
One area of particular interest to legal cannabis investors is banking. Or more specifically, opportunities to make it easier for consumers to buy cannabis, and for dispensaries to sell it.
Certainly running an all-cash business has its challenges. From security concerns to basic operational efficiencies, the ability to grow and thrive can be limited without access to traditional banking services.
So it’s no surprise that hundreds of companies have sprung up in an effort to facilitate alternatives to traditional banking and payment services. And to be honest, I’ve seen some pretty creative ideas. But the truth is, no matter how creative some of these ideas may be, there really are few long-term, viable alternatives to traditional banking services.
So while the Fed continues to make it difficult for honest, hard-working entrepreneurs in the legal cannabis space, a billion-dollar industry awaits REAL change in Washington.
Policy-makers Stepping Up
Despite an abundance of dinosaur prohibitionists and red-eyed psychotic war hawks in Washington, we are starting to see more policy makers introducing legislation that would alleviate some of the banking issues associated with legal cannabis sales.
For instance, last year, Congressman Ed Perlmutter (D, CO) re-introduced the Marijuana Businesses Access to Banking Act of 2015, which was designed to provide a safe harbor to banks working with legal cannabis businesses by prohibiting federal regulators from terminating or limiting their deposit insurance coverage. The bill has three republican co-sponsors, making it a very interesting display of bi-partisan cooperation.
Then last month, there was the introduction of an amendment to U.S. Senate bill S. 524.
S. 524, known as the Comprehensive Addiction and Recovery Act of 2015, directs the Department of Health and Human Services to convene a Pain Management Best Practices Inter-Agency Task Force to develop: (1) best practices for pain management and prescribing pain medication, and (2) a strategy for disseminating such best practices.
The amendment to S. 524 would allow banks to work with cannabis businesses, so long as they’re in legal states and are following a set of regulations.
In another show of bi-partisan cooperation, both Senator Rand Paul (R, KY) and Elizabeth Warren (D, MA) co-sponsored this amendment.
A Tsunami of Profits
Although the legal cannabis industry is already insanely profitable, it’s not even close to being where it will be in another few years.
I predict that by 2020, legal cannabis operations in the U.S. will be able to utilize traditional banking services with few restrictions. And when that happens, be ready for a tsunami of increased profitability for the legal cannabis companies in which we currently invest.
This, dear reader, is one of the many reasons we’re staking our claim today by taking positions in a number of quality, publicly-traded legal cannabis companies. Three of which can be found in our report: Marijuana Outlook: Stocks to Buy in 2016. The report is free, and you can download it here.
