Legal Cannabis Companies Need Access To Banks
By Matthew O'Brien
Legal Cannabis Companies Need Access To Banks
When will legal cannabis companies have access to the banking system?
Legal cannabis sales will exceed $22 billion USD in the U.S in 2021.
Despite all of this commerce occurring in states where cannabis is legal, cannabis companies are still locked out of large parts of the banking system.
There are several consequences cannabis companies have to contend with courtesy of their inability to access the banking system.
With customers purchasing products using cash, one of the primary problems cannabis companies face is having to deal with large amounts of cash.
Almost every other industry takes for granted the ability to work with payment processors like Stripe to accept online payments & companies like Square to accept digital payments in store.
The U.S cannabis industry does not have access to these financial services.
Crimes against cannabis
In the last month alone several cannabis retailers have been robbed in San Francisco — with the combined losses estimated to be at least $5 million.
“Cannabis businesses are being robbed year-round, but no one is talking about it,” said Tucky Blunt, the owner of an Oakland cannabis shop.
The political problem…
This problem has received a great deal of attention this year as more & more politicians publicly support the SAFE banking act — a bill that would grant U.S cannabis companies access to the banking system.
Earlier this week, U.S Treasury Secretary Janet Yellen also expressed her support to allow legal cannabis companies to access federal banking services on the grounds that it would make it easier to collect taxes.
The biggest hurdle this bill faces isn’t the lack of support for cannabis.
The problem is the political games that are being played in Washington where politicians are competing against each other to claim victory for passing their proposed version of legislation to legalize cannabis.
With 68% of Americans supporting the legalization of cannabis, we now have both Republicans and Democrats proposing bills.
The (SAFE) banking act focuses on banking reform, while the Senate majority leader Schumer wants to federally legalize cannabis under the (CAOA) act.
Republican senators Dave Joyce & Alexandria Ocasio-Cortez are proposing the (HOPE) Act which incentivizes states and local governments to expunge cannabis records.
Lastly, Vice President Kamla Harris is the sponsor of the (MORE) act which would also legalize cannabis in the U.S with a strong focus on social equity.
While this progress is great to see, for any of these bills to pass — the parties need to reach a consensus on which specific bills they are supporting.
With each new proposed bill to legalize cannabis, we are witnessing a further fragmentation of parties thus reducing the possibility of politicians in Washington reaching a consensus on this issue.
The current support for legalizing cannabis has created a situation whereby there are so many political points on offer — that we now have too many politicians creating their own proposals to intact this change.
Cannabis Over Christmas
Breaking down the role cannabis plays during Christmas celebrations….
With U.S consumers on track to spend over $22 billion USD this year on cannabis — it’s clear that consumers love cannabis.
To understand the role cannabis will play during the upcoming Christmas celebrations, Jushi Holdings surveyed 1,000 cannabis consumers in the U.S.
91% of the participants indicated that they plan to consume cannabis as part of their upcoming holiday celebrations.
76% of the participants indicated that they intend to gift cannabis or cannabis related accessories during the holidays.
An additional 11% of participants indicated they would gift cannabis once cannabis becomes federally legal.
What consumers want…
50% of consumers indicated the amount of THC in a product is the most important factor with a product’s price point coming in second place at 49%.
Despite the inconsistency of the cannabinoid & terpene profiles, cannabis strain names also rank as an important factor when consumers are determining the cannabis flower they would like to purchase.
74% of the participants indicated that the strain name is an important factor when purchasing dried flower, with the same number of participants indicating that the brand is an important factor.
The way consumers purchase cannabis has changed & continues to change.
Throughout the pandemic, retailers were forced to move their operations online which resulted in an explosion in e-commerce.
Per Jane technologies, 17% of legal cannabis sales were done online before the pandemic, however, during the pandemic, online sales reached 52%.
As retailers once again open their doors, 58% of cannabis consumers indicated that they prefer to purchase cannabis products in-store, however, 43% of consumers still prefer to do their shopping online.
Of the consumers shopping online, 62.7% prefer to use click & collect with the remaining 37.3% opting to have products delivered to their homes.
It’s fantastic to see the increased normalization of cannabis in the U.S as more & more adults are willing to gift cannabis, in addition to being comfortable consuming cannabis in a social setting.
Building Brands That Matter
Breaking down Headsets latest report on cannabis vape pen brands in Cali…
Whereas once consumers were accustomed to purchasing a bag of weed, consumers can now choose between hundreds of different cannabis brands.
With a growing number of brands being brought to market the question remains, how can cannabis brands stand out?
I highly recommend reading the full report as Headset shared some great insights in this report that focused on cannabis vape products in California.
Here are the numbers that stood out;
The average vape pen brand in California will see about 45% of customers repurchase their brand within six months.
- 32.6% of these consumers will purchase multiple brands.
- 12.6% of these consumers are loyal to this single vape pen brand.
To understand how consumers purchase cannabis vape pen products Headset highlighted the following information;
- 38% of the average customer’s spending goes to their #1 vape pen brand.
- 6% of the average customer’s spending goes to their #2 vape pen brand.
- 5% of the average customer’s spending goes to their #3 vape pen brand.
As we can see, there are cannabis brands that are building very strong brand loyalty in a category that is extremely competitive.
While Cookies has done an amazing job building its brand for dried flower, Stiizy has also done an amazing job at building its brand for vape products.
It’s very difficult to build brand awareness in cannabis today, such that having good product distribution is absolutely essential.
California is extremely competitive and a majority of cannabis brands focus on supplying products to specific regions as opposed to supplying the entire state.
When interstate commerce opens up, I can see a number of the top cannabis brands in California becoming some of the top brands in the United States.