A few weeks ago, Missouri voters approved a ballot measure legalizing adult-use cannabis, joining 20 other states with similar legislation. The law went into effect on December 8, with the first retail licenses set to be approved by early February. While Missouri has had a medical marijuana program in place since 2020, the introduction of an adult-use program represents a significant expansion of the market. According to MJBizDaily estimates, Missouri’s first-year adult-use sales could reach up to $550 million, with fourth-year sales projected to generate $800 to $900 million. As we’ve seen in other states, a new legal market for adult-use cannabis brings a surge of new businesses and capital. To ensure the processes, procedures, technology, and trained staff to serve this industry are in place, bankers need to start with a plan. Fortunately, a playbook exists to help bankers understand both the opportunities and the risks related to serving cannabis-related businesses (CRBs) and navigate this new market successfully. Here are a few points from that playbook to keep in mind. Understand the Realities of Cannabis Banking While banking this line of business 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 the strategic business reasons for getting involved. A clear understanding of what is required to serve CRBs and minimize risk to the financial institution will help bankers determine if this industry is a good fit for their institution. Update Policies and Procedures Banks will need to update their existing policies and procedures to reflect the compliance and regulatory requirements of this industry or develop new ones if necessary. Cannabis banking will touch almost every aspect of the business, from audits and insurance to cash transporting and processing and even branch security. As new businesses enter the industry, you’ll need to have rigorous risk assessment standards and procedures in place to ensure you’re banking legal funds and have a clear line of sight into the business and its beneficial owners. ARE YOU READY TO SERVE MISSOURI’S FAST-GROWING CANNABIS MARKET? By Tony Repanich, Shield Compliance 20 | The Show-Me Banker Magazine
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