16 azbankers.org By Tony Repanich, CEO, Shield Compliance Are You Ready to Serve Arizona’s Fast-Growing Cannabis Market? In November, 2020, Arizona joined a growing number of states legalizing cannabis for adult use. While Arizona has had a medical marijuana program in place since 2010, the move to welcome recreational marijuana represents a significant expansion of the market. With 73 dispensaries already approved to sell recreational marijuana, Arizona is on track to surpass $1 billion in total annual sales of medical and recreational cannabis. Some analysts predict the state will top $2 billion in annual sales after recreational sales have been in place for a few years. As a result, cannabis companies from around the country have been exploring expansions and acquisitions in Arizona, and existing companies are planning to grow. As we’ve seen in other states, a new legal market for adultuse cannabis brings with it a surge of new businesses and new capital. To ensure they have the processes, procedures, technology, and trained staff to serve this industry, bankers need to have a plan in place. Luckily, there is a playbook to help bankers understand both the opportunities and risks of serving cannabis-related businesses (CRBs) and the tools they need to successfully navigate this new market. Here are a few points from that playbook to keep in mind. Understand the Realities of Cannabis Banking While banking in this industry offers compelling financial benefits, such as new low-cost deposit growth, non-interest income, and the potential for earning assets, banks need to make sure they are grounded in the realities of the cannabis industry and their business reasons for getting involved. Having a clear understanding of what is required to serve marijuana-related businesses and minimize risk to the financial institution will help bankers determine if this industry is a good fit for their bank. If so, prepare for the associated upfront costs, educate your board and partners, and begin developing the policies and procedures needed to hit the ground running. Update Policies and Procedures to Operate Compliantly Banks will need to update their existing policies and procedures to reflect the compliance and regulatory requirements of this industry or to develop new ones, if necessary. Cannabis banking will touch almost every aspect of your business, from audit requirements and insurance
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