馃攳
The Cannabis Industry Has a Banking Problem. But That Could Change | WSJ - YouTube
Channel: unknown
[0]
(machine whirring)
[3]
- We are required to take a lot of cash
[5]
and cash is expensive to
handle, it's cumbersome
[8]
and it creates a whole nother
boatload of challenges.
[11]
We need all the services
[12]
that most businesses use.
[14]
We just wanna operate
like a normal business.
[18]
- [Narrator] The legal
cannabis market in the US
[20]
achieved about $20
billion in sales in 2020,
[23]
according to industry analysts.
[25]
That could grow to over 40
billion annually by 2025.
[30]
Still, most big banks won't
work with cannabis companies
[33]
because marijuana is
illegal under federal law.
[36]
And the regional banks
or credit unions that do
[39]
often offer minimal services
[40]
with high fees but that could change
[43]
with the Safe Banking Act,
[45]
which passed the house in April.
[47]
If it became law, cannabis sales
[49]
would no longer be considered illegal,
[51]
making the banking system accessible
[53]
to the cannabis industry.
[55]
The bill's fate in the Senate is uncertain
[58]
but many in the industry are encouraged
[60]
by the growing number of
states legalizing the drug
[62]
in a Democratically controlled Senate
[64]
whose majority leader has voiced support
[66]
for broader legalization.
[68]
- In state after state,
[70]
through ballot initiatives
[71]
and constitutional amendments,
[73]
the American people are
sending a clear message
[76]
that they want this policy changed.
[79]
- [Narrator] But some Democrats
[80]
and most Republicans oppose legislation
[82]
that would remove marijuana
[84]
from the controlled
dangerous substances list.
[87]
(upbeat music)
[92]
So for now, these companies
face a lot of restrictions,
[95]
like limited access to capital
[97]
and financial services like credit cards.
[100]
- I'm the CEO of Canna Provisions.
[102]
We're a vertically integrated
[104]
adult use cannabis
company in Massachusetts
[107]
with the cultivation and also
manufacturing on the way.
[113]
We basically accept two forms of payment.
[115]
One is cash and one is a debit card.
[119]
- [Narrator] Sanders
estimates that roughly 40%
[121]
of transactions at her
dispensaries involve debit cards.
[124]
That means the company has
to deal with a lot of cash.
[130]
We have two full-time employees
that just manage our cash.
[134]
We have to use an armored car service
[136]
in order to move our money
[138]
from our location to our bank.
[140]
It's expensive to have this service
[142]
but safety is a priority
[143]
and this is the safest
way to do it right now.
[147]
- [Narrator] Even
maintaining a bank account
[149]
can be expensive for cannabis businesses.
[152]
- For a typical cannabis operator,
[154]
the cost of maintaining a bank account
[156]
can scale up to about $10,000 a month.
[159]
- [Narrator] Nick Friedman
is CFO of Theory Wellness,
[161]
a Massachusetts-based company
[163]
that also operates in Maine.
[165]
- Starting Theory, we
didn't have a huge amount
[168]
of capital at the time
[169]
and we purposefully decided
[171]
to keep it private and
not go to private equity,
[174]
simply looking to our own resources
[176]
and to friends and
family to find the funds
[178]
to start the business.
[180]
We raised about $3 million.
[182]
- The industry has become
much more sophisticated.
[185]
We're seeing it now taking
hundreds of thousands,
[188]
if not millions of dollars
to get operational.
[191]
If you only have one
place you can go for loans
[193]
or investment capital,
[195]
then they have the
ability to set the terms,
[197]
which means you're much less
likely to get favorable rate.
[202]
We know businesses that are paying
[203]
20, 30, 40% interest
rates on business loans.
[207]
As the cost for participating
in this space has gone up,
[211]
it has meant that poor
and minority communities
[214]
have faced much more of a challenge trying
[217]
to get a seat at the table.
[219]
(upbeat music)
[220]
- The challenge with it is you end up
[223]
giving a pretty good
chunk of your company away
[225]
in order to get your company financed.
[227]
In Massachusetts, to
open Canna Provisions,
[230]
we raised $5 million.
[233]
I would have wished we could
have at least gotten mortgages
[235]
for our properties
[236]
because that would have been
probably a million and a half
[239]
that I wouldn't have had to raise.
[241]
- We would expect some
pretty consequential changes
[243]
to the industry landscape
[245]
if federal banking reform or
something equivalent to it
[248]
were to pass.
[249]
The first thing we would expect to see
[250]
is a significant drop in the
cost of financing the business.
[254]
And as a result, we would expect
[257]
to see a lot more entrepreneurs
[259]
start exploring
opportunities in the space.
[261]
(pensive music)
[264]
- I think one implication
would simply be the refinancing
[268]
of some of our debt,
[268]
which is at interest rates
[270]
that I would say is less reflective
[272]
of the risk state of our business
[273]
but simply more reflective
of the limited supply
[276]
of capital that exists out there.
[278]
- Thank you, have a good day.
[279]
- We still have to
borrow at interest rates
[282]
that are extremely high.
[284]
- We are doing very well
[286]
and any bank that I
went to with our numbers
[290]
and our balance sheet and our P&L
[292]
would say how much do you want
[293]
and how quickly can I give it to you?
[297]
I can't do that right now.
[298]
You should be able to
build on your success,
[300]
not only as a company
[302]
but also with your bank
and financial institutions
[304]
to make sure that you can keep growing
[306]
as fast as the market needs you to.
[308]
And I think that's a big hindrance to us.
[310]
(pensive music)
Most Recent Videos:
You can go back to the homepage right here: Homepage