Access to banking services is one of the major problems facing the cannabis industry as very few banks are willing to offer accounts to marijuana businesses operating legally under state law. While federal prohibition will always limit banking options, some financial institutions are warming up to cannabis businesses, including Severn Bank in Maryland as New Cannabis Ventures covered:
In March, we reported that Severn Bank (NASDAQ: SVBI), an FDIC-insured holding company based Annapolis with six branches in Anne Arundel County, revealed for the first time that it is serving the cannabis industry in a substantial manner. At year-end, it reported $19.2 million in cannabis industry deposits, or 3.2% of its total deposits, and that it had made loans totaling $11.9 million at year-end, or 1.8% of all loans.
The company filed its 10-Q for the second quarter today and detailed its expansion over the past six months. The bank now reports deposits of $27.8 million (4.5% of deposits) and has loan balances of $15.3 million (2.2% of all loans). It also reports that medical cannabis customer accounts were primarily responsible for its $566,000 increase in deposit service charges in the first half of the year.
The cannabis industry continues to struggle generally with access to banking, including being able to deposit cash. Many companies and banks and credit unions are reluctant to speak publicly about the topic, and only a handful of publicly-traded companies appear to cater to the industry. First Green Bank in Florida abruptly exited the business just ahead of its acquisition by publicly-traded Seacoast Banking Corp, which didn’t want the exposure to the risks.
While the cannabis industry still has a ways to go to get on a level playing field with other businesses, seeing banks like Severn rapidly increase its marijuana business clientele is a good sign. We must continue working hard passing state legalization laws and lobbying Congress to fix this ridiculous burden for entrepreneurs complying with state law. In the meantime, we should reward banks accepting cannabis clients by opening both business and personal accounts with them. I’ve highlighted some “ordinary” businesses investing in cannabis that investors may want to consider buying into, and Severn, trading on the Nasdaq as SVBI may be a stock to add to the list.
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