Bank on Credit Unions for Cannabis Accounts
In the two years since legalization in October 2018, cannabis has become a juggernaut industry in Canada, blazing trails through product development and market expansion to consumer education and customer confidence.
Stats Canada’s Cannabis Hub, data collected monthly from cannabis stores, states that cannabis retail sales across Canada in August 2020 were $244.9 million, up from $126 million in August 2019. The number of federal license holders (required to cultivate, process and sell cannabis for medical or non-medical purposes) in August 2019 was 221, up from 116 in August 2018.1 In the first year following legalization, the retail non-medical cannabis market grew considerably, with retailers of legal cannabis establishing more than 400 brick-and-mortar stores2.
However, there has been a built-in brake on this fast-growing industry – until now, only one of the major five banks (BMO) has allowed cannabis stores to open an account – and only after paying an up-front, non-refundable fee of thousands of dollars, followed by an application process without guaranteed approval. With so much data available, mitigating many of the historic risks, why are the major financial institutions still so resistant?
There are glimmers of hope, though. Some credit unions do allow cannabis accounts to be set up. Credit unions are, generally speaking, smaller, community-based financial institutions that operate on a more agile basis, able to make decisions driven by first-hand knowledge of the businesses and business owners in their community.
A shining example of this is happening now in British Columbia: Kootenay Savings is partnering with the BC Craft Famers Co-op to offer new personal and business non-registered chequing or savings accounts, enabling co-op members to open accounts, manage transactions and pay staff.
Financial institutions need to overcome the dated stigmas attached to cannabis and get on board to support this legal and lucrative industry; the future is green.
Need help navigating through this? Contact us at Rising Tide Consultants; we know the way forward.