Any connection between banks and the financial industry with cannabis businesses poses legal and regulatory risks. The cannabis industry still faces significant banking challenges, leading most transactions to be conducted in cash, which makes these businesses prime targets for robberies and burglaries.
This is despite the global cannabis market being worth around $64 billion, with the US accounting for a major portion, and it is projected to surpass $74 billion by 2029. As the market continues to expand, more states are legalizing cannabis use. In 2023, cannabis legalization reached its highest point at the state level, with 25 states legalizing recreational cannabis and 38 states legalizing cannabis for medical use.
However, restrictions on facilitating financial transactions persist. The stigma attached to cannabis means financial institutions and banks risk a negative reputation if they support cannabis transactions. As a result, many remain wary of being labeled 'weed banks,' making cannabis banking a major struggle for business owners.
In fact, a federal ban on cannabis has blocked the use of debit and credit cards for payments to cannabis dispensaries. In 2021, VISA released a memo reiterating that using their payment channels for cashless ATMs is against company rules and violates regulatory prohibitions under the Controlled Substances Act. Similarly, in 2023, Mastercard prohibited all cannabis transactions through its channels.
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