Consumer and business patterns will be inexorably changed and small to medium-sized business, particularly, will have a difficult time recovering lost profits and liquidity. In turn, long after the fee boost from PPP has been felt, and absorbed, by the financial services sector, they will face struggles in both the commercial and consumer sectors.
While community financial institutions currently have their hands full in meeting the immediate needs of their customers and institution, they may eventually want to evaluate what may have been a third rail previously in the commercial sector. After all, while not untouched by the financial impact of COVID-19, many cannabis-related businesses have not had access to leverage and will not drown in lack of liquidity and cash flows to service debt. The cannabis industry is also a quickly growing market that represents the best opportunity in which to add unserved commercial clients.
But, can it be done safely? The answer to this question is yes, if it is done with proper consideration and not on an ad-hoc basis. A cannabis banking program requires putting in a comprehensive system that includes ongoing subject matter expertise about laws and regulations, proper vetting and monitoring of the cannabis clients, an ongoing system of reporting and activity tracking, and exercising operational best practices.
What if my institution doesn't have the resources to do all that? There are credible partners with subject matter expertise that can help offload those resources. Most importantly, after netting the expenses for all of the resources required, the cannabis industry still represents an incredible ROI for financial institutions.
In good economies it is easier to pass on some opportunities that may not have initially aligened with the core mission of the bank. As times get more challenging, it may be necessary for institutions to expand that view of potential core opportunities. HDCS is pleased to offer a free evaluation of how a very profitable and prudent cannabis banking program can be established at your financial institution.
HDCS, Inc. | CEO/Founder