- This exposes these SMBs to all types of risks, from security to cash flow management, and is the direct result of banks and credit unions (CUs) being unwilling or unable to provide financial services to these companies.
- This categorization of the marijuana market as high risk is also likely to continue to act as a barrier for companies in the space that seek financial services and products beyond the basics, even if and when federal legalization occurs.
- We’re still years off, but when it becomes federally legal, this will still remain a high-risk industry for banks and credit unions, said Beuerlein, who pointed to the heavy regulatory compliance burden that FIs must carry if they’re going to expand their offerings to this market.
- Federal legalization is likely to open up some financial services doors for the cannabis market, with Beuerlein noting it would open up the branded CUs, FIs will continue to struggle to provide services beyond holding deposits and facilitating payments.
- As demand for electronic payment services, loans and other financial products deepens, FIs will have to decide how to balance the compliance burden with the revenue opportunity of addressing an underserved market.
Read full article: pymnts.com