As marijuana legalization spreads across the United States, many companies have worked to address the industry-specific challenges that operators faced, particularly with regard to access to financial services, insurance, legal, compliance and regulatory issues as well as the security challenges created by the cash-only operations of many marijuana companies. There is speculation and hope that the SAFE Banking Act, or another version of this law, could be passed in this coming lame duck session of Congress. How will such a law impact the companies that stepped in to serve cannabis businesses?
Some in the industry, including Tyler Beurlein, who works as a business development officer at Colorado-based SHF Holdings, think it will take years for any banking reform to seep through to the practical realities of the marijuana industry. Given that marijuana would still remain federally illegal, not many traditional banks will enter the industry, he says, and that would leave existing players with space to serve the clients they have always served.
He is, however, cognizant of the possibility that SAFE Banking may cut into the business of some companies, and these would either have to consider M&A with larger players or even exit the industry altogether.
Katrina Skinner, chief banking officer and general counsel of Simplifya, a company that provides compliance and regulatory software to the cannabis industry, believes that the passing of the SAFE Banking Act would bring more opportunities because every change opens up business opportunities. Most importantly, she thinks that any federal marijuana banking law would do the cannabis industry the huge favor of clarifying what the applicable regulations are. At the moment, regulations aren’t very clear, and banks have to rely on not-so-detailed guidance provided by federal regulators.
For example, she mentions the burdensome suspicious activity reports that financial institutions serving marijuana companies have to file even if no suspicion of money laundering or fraud exists. Removing such a needless requirement would reduce the costs of providing banking services to marijuana companies, which would be a significant benefit.
There is also a chance that passing SAFE banking would impact insurance for cannabis firms. The entry of new players could result in lower premiums, or the law could result in more data showing that the industry is more risky than initially thought, which could have the opposite effect on premiums. It is too early to predict, says James Whitcomb of the Frontier Risk Group.
What is certain is that the passage of a cannabis banking law would have far-reaching ramifications, and individual companies such as REZYFi Inc. would have to assess how to adjust their strategies in light of the particulars of the banking law when it is implemented.
NOTE TO INVESTORS: The latest news and updates relating to REZYFi, Inc. are available in the company’s newsroom at https://cnw.fm/REZY
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