It’s been a rough relationship for the marijuana industry and the U.S. banking system. Drawing on recent setbacks from the Federal Reserve that would have given Colorado its own banking service tailored to its $700 million a year marijuana market, allowing dispensaries an alternative to their current cash only business, it seems as though disappointment and hindered progress are the only objectives being outlined on marijuana’s quest for legitimate banking rights.
Despite the many uncertainties surrounding marijuana legalization’s non-existent introduction into a legitimate central banking system, a recently leaked document from one of the banking industry’s major players, reveals a bright future outlook for at least one segment of the industry, as the rest continues its search for a suitable solution to its current ‘duffle bag’ and ‘hide it in a safe’ money handling procedures.
What the Document Revealed
In a private 45-page equity report exposed by Chris Goldstein of Philly.com
, Bank of America’s investment branch, Merrill Lynch, details how it’s especially “bullish on the cannabis testing market.” Basing its analysis heavily on the expectations of marijuana legalization eventually being accepted on a federal level, reaching an estimated $13 billion in anticipated revenue by 2020, the report outlines the importance of investing in equipment designed for testing the quality and potency of marijuana, presented in the report as “Life Science Tools.”
Specialized devices such as liquid chromatography, mass spectrometers, and gas chromatographs were among the equipment deemed as “Life Science Tools” presented in Goldstein’s analysis of the report, estimating revenue growth between $50 million and $100 million by 2020 for this sector alone. Citing recent recalls of various marijuana products in Colorado and other legalized states that failed to meet food and safety compliance due to pesticides, contamination, and potency standards, Goldstein’s analysis of Merrill Lynch’s key investment strategy for the marijuana industry, sheds light on how the banking system is tiptoeing around the issue of marijuana, while keeping a steady eye on its “high POTential.”
Also mentioned in the report, meant for investors
, were various billion dollar manufacturers of "Life Science Tools" as well as pharmaceutical companies, detailed as "safe bets" for investors wanting to take advantage of the marijuana industry without getting their hands dirty, as it progresses towards being made federally legal. Names such as Aligent Technologies, Waters Corporation, Thermo Fisher Scientific, and GW Pharmaceuticals, a company specializing in THC sprays and CBD derivative drugs for children with epilepsy disorders, were some of the biggest names mentioned.
The Marijuana Industry Needs a Banking System
All one has to do is look at the recent crime targeted against legal marijuana dispensaries operating in cash only business to realize that change in the banking sector needs to occur sooner than later, especially as more states enact legalization measures.
Offering marijuana dispensaries increased access to banking would significantly decrease the current threat of robbery and crime by allowing customers the option to pay with debit and credit cards, thus limiting the need to deal in cash only business. Banking services would also reduce the chances of marijuana businesses being used as "fronts" for money laundering, making them less of a public safety issue.
Without access to legitimate banking services, marijuana dispensaries often have to deal with the nightmare of paying their taxes in cash, creating a multitude of problems for government financial agencies that have to formulate alternative strategies for local and regional offices to make up for the increase in cash circulation. Whether or not Merrill Lynch’s leaked investor report will do anything to change the perspective of how the marijuana industry is viewed by the banking system as a whole, remains to be seen. As a new bipartisan marijuana banking bill
introduced by Oregon and Colorado delegates hangs in the balance of Congress, which would prohibit the federal government from penalizing banking institutions that work with marijuana dispensaries, only time will tell if marijuana's "high POTential" will be met with a legitimate banking system.