Although cannabis is legal at the federal level in Canada, main retail store owners are having trouble accessing basic financial services. These operators are unable to access simple services like opening checking accounts and we believe this aspect of the industry needs to change.
The limited access to capital is stifling the growth of the Canadian cannabis sector and we are surprised that licensed businesses are facing this issue. One of the main issues with this problem is related to how it is supporting the growth of the black market in Canada.
According to the Association of Canadian Cannabis Retailers (ACCRES), 50 of its 52 members in British Columbia (B.C.) have been denied access at traditional banks and have been forced to turn to local credit unions instead.
Currently, there are around 400 legal cannabis retailers in B.C. and many experts believe this number would be higher if store owners could access basic financial services from banking institutions.
B.C. is not the only province being affected by the lack of banking services for cannabis companies in Canada. Based on information that we have come across, more than 90% of Canadian cannabis companies are affected by this issue and we find this number to be eye-popping.
Some experts attribute the lack of banking services available to Canadian cannabis companies to cannabis being illegal in other countries. Most banks in Canada also operate in other countries and we believe the stigma that is associated with cannabis in these markets have made the banking process more challenging.
Over the next year, we expect to see more countries pass regulations to legalize medical and/or recreational cannabis. We believe the stigma is fading and expect the COVID pandemic to accelerate the legalization trend in certain markets.
The pandemic has put additional pressure on countries to generate more taxable revenue and we believe that legal cannabis will be part of the solution. During the last year, we have seen countries benefit from the legalization of sports betting and the trend of legalizing industries that are levered to certain vices is becoming more significant.
If you are interested in learning more about the Canadian cannabis retail market, please send an email to firstname.lastname@example.org with the subject “Canada’s Cannabis Retail Market” to be added to our distribution list.
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