Arnon Dror | Cannabis, Banks and the Law
Should banks do business with cannabis companies? This question has been the topic of debate for months now among bankers and cannabis business owners. With the marijuana industry seen to grow to as much as $23 billion by 2022, Arnon Dror believes that banks could be missing out if they don’t.
The reason why banks aren’t doing business with cannabis companies boils down to the law, explains finance executive Arnon Dror. Recreational use of marijuana is legal only in ten states in the US, but under federal law, marijuana is still considered illegal. As such, banks find themselves caught in the middle of a huge and lucrative legal conflict. There are banks however that are willing to take the risk and lend a line of credit to cannabis companies. They are expected to file any suspicious activities in relating to these cannabis accounts. Image Source: nawrb.com
As it is, investors who bought shares of cannabis companies are already reaping the rewards of their gamble. As of this writing, the marijuana sector is up on its 7th straight day, in part due to the outcome of the midterm elections. The biggest victory thus far is the resignation of Attorney General Jeff Sessions, says Arnon Dror. Jeff Sessions has been a long-time anti-marijuana advocate who moved for the Department of Justice to prosecute medical marijuana providers.
Last Tuesday, Michigan joined the pro-marijuana party as the 10th state to legalize the controversial plant for recreational use, winning with a 56-44 vote. Arnon Dror shares that marijuana has been legal for medicinal use in Michigan since 2008 with a 63-37 decision. Given this backdrop, it comes as no surprise that voters moved in favor of marijuana’s recreational use, though only a decade later and after nine others. With Jeff Session’s exit, more states may soon follow with pro-marijuana advocates lobbying stronger at Congress.
The debate on marijuana has been going on for years, says Arnon Dror. There are reportedly several health benefits to using marijuana. Among them are treatment for chronic pain, muscle spasms, epileptic seizures, anxiety, Alzheimer’s disease, multiple sclerosis, and arthritis. While some of the studies and available literature are in the preclinical and experimental phases, the findings of researchers are nonetheless promising.
In the meantime, until lawmakers sit down and resolve conflicts in the law, Arnon Dror believes that at the end of the day it’s prudent for banks to stay on the sidelines for now. This is because banks may be slapped with laundering charges if they do business with cannabis companies. This means they can’t provide a line of credit nor provide space for these cannabis companies to park their cash. The industry may be a pot of gold, but if analysts are to be believed, this is only the beginning of a booming industry that will provide thousands of jobs and relief to patients who need it for their ailments. As such, they might not be left behind after all.
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