Cannabis entrepreneurs in California are expected to earn $5.2 billion next year as recreational use of the drug becomes legal in the state.
California is one of eight states in the US where voters have legalised the drug for recreational use, even though it’s still included in the federal government’s list of ‘schedule one’ drugs.
Sellers are not the only ones who’ll be making a lot of money off this though, as the state itself will collect around $1 billion in accompanying taxes.
As reported by Forbes, these numbers have been estimated by Matt Karnes, an industry analyst and managing partner at New York’s GreenWave Advisors.
The numbers indicate there’ll be a major need for banking and financial services in the soon-to-be legal cannabis industry.
Currently however, these services just aren’t available and are actually federally illegal.
Currently classified as a ‘schedule one’ substance, cannabis is in the same category as heroin and banks risk losing their charter if they work with companies who sell marijuana.
Banks must go on record when they establish a relationship with a cannabis business and Karnes believes only five per cent of all financial institutions have done so.
Eager to avoid dealing with the drug at all, fewer than one per cent of all US banks are currently working with companies related to cannabis.
Yet change is on the horizon as companies are realising something needs to be done.
Various start-ups, such as Shield Compliance, are offering software to weed entrepreneurs and banks, which will help them keep their records straight and transparent to reduce risks involved.
No major inroads have been made yet and various businesses are left with no other choice than to operate using cash only.
This means cannabis related companies need to spend more on safes, cameras, guards and armoured pick-ups.
The safety of the public can also be put at risk because so much cash is stored at known locations.
Other companies decide to hide the name of their business from their banks, while many turn to using cryptocurrencies, a move which brings with it a whole new set of problems.
These new currencies are so complex they have a lack of transparency, tend to fluctuate in value and are very unstable.
However, there’s still time to resolve these issues and of course, once the legalisation comes in next year, there’ll naturally be many learning curves.
Emily Murray is a journalist at UNILAD. She graduated from the University of Leeds with a BA in English Literature and History before studying for a Masters in Journalism at the University of Salford. Emily has previously worked for the BBC, ITV and Trinity Mirror. When Emily isn’t writing about topics including mental health and entertainment, you can find her at the cinema which is her second home.