Too High; Didn’t Read (TH;DR): A new survey by Shield Compliance reveals significant gaps in cannabis banking, highlighting operators’ concerns about products, fees, and financial institutions’ understanding of the cannabis industry. The demand for lines of credit, equipment financing, and real estate loans remains high, and FIs must leverage technology and deepen their knowledge to better serve cannabis businesses. With potential changes to tax code 280E and rescheduling of cannabis, the industry expects improved profitability, offering banks new opportunities to engage with cannabis operators.
At the PBC Conference in Washington, Shield Compliance—a leader in compliance solutions for cannabis banking—released its 2024 cannabis banking survey results. These results offer a critical view into the banking needs of licensed cannabis operators. As cannabis becomes more mainstream, financial institutions (FIs) must evolve to serve this growing market effectively while ensuring compliance with both state and federal regulations.
Cannabis Operators: Satisfaction and Frustration with Banking Services
Despite 83% of respondents being satisfied with their bank’s customer service, fewer would recommend their financial institutions to other cannabis-related businesses (CRBs). The recent cannabis banking survey indicates that dissatisfaction with fees (53%) and a lack of tailored banking products continue to be pain points for operators.
For a deeper look at the evolving cannabis banking landscape, check out this American Banker article.
Cash Flow, Profitability, and Credit Access: Top Concerns
Cannabis businesses still face major financial challenges. The survey shows that cash flow remains the top concern for operators, followed closely by profitability and access to credit. According to the cannabis banking survey, cannabis operators are particularly interested in:
- Operating lines of credit (79%)
- Equipment financing (72%)
- Real estate loans (67%)
If federal regulations like 280E are revised, rescheduling cannabis could ease financial pressures and make cannabis operators more profitable.
You can read more about Section 280E and its impact on cannabis businesses here.
Technology’s Role in Cannabis Banking Compliance
Technology is increasingly critical in managing cannabis banking compliance. Tony Repanich, President and CEO of Shield Compliance, emphasized how tech can reduce the burden and create a better experience. Shield Compliance’s platform allows FIs to automate processes, integrate data sources, and manage regulatory risks more efficiently. Their recent cannabis banking survey underscores the importance of technology in this space.
For more insights into the use of technology in cannabis banking, visit Shield Compliance’s blog here.
Opportunities for Financial Institutions
With almost 80% of cannabis operators anticipating industry growth or profitability in the next 2-3 years, financial institutions need to prepare to serve this expanding market.
Findings from the cannabis banking survey suggest that by improving their understanding of the cannabis industry and offering tailored financial services, FIs can gain a significant competitive advantage.
The cannabis banking survey indicates that FIs can gain a competitive edge by better understanding the cannabis industry and offering specialized financial services.
For a detailed analysis of how cannabis rescheduling may affect the banking sector, read this report from American Banker.
