The refusal of Canada’s major banks to work with the legal cannabis industry is perceived as a lack of accountability, ultimately contributing to the black market, according to drug policy activists and industry advocates. This has led to increased costs for companies operating within the regulated cannabis space, stymying their ability to grow and prosper.
Despite being a legal business, some argue that the banking rules are discouraging entrepreneurship and inhibiting the growth of this significant sector in Canada, one of the few countries with nationwide legalization of marijuana for medical and recreational use.
Onerous Costs for Basic Banking Services
Even the Cannabis Council of Canada, which represents licensed cannabis businesses, has been unable to open an account at any of the country’s five big banks. Consequently, organizations have experienced higher fees for basic banking services. For example, one bank reportedly charges $4,000 per year and $100 per month for basic banking services, further straining the resources of legal cannabis businesses.
This lack of support from Canadian financial institutions makes it almost impossible for businesses in the legitimate cannabis industry to access loans and other financing options. As a result, many aspiring entrepreneurs feel discouraged from entering this space, which offers potential support to unregulated and dark markets rather than fostering innovation and regulations within the legal domain.
Speculations About Canadian Banks’ Resistance
Some speculate that Canadian banks’ reluctance to collaborate with legal cannabis firms stems from concerns about tarnishing their reputation in the United States, where cannabis remains federally illegal. Others claim that banks might be hesitant due to uncertainty surrounding the growth and societal implications of the nascent industry.
Whatever the cause, the current situation highlights the need for greater cooperation between Canada’s banking regulators and the regulated cannabis industry. Developing better conditions for providing access to financial services must be a priority if Canada wants to maintain its position as a leading player in the global cannabis market.
The Ripple Effect on Auxiliary Industries
The legal cannabis sector is not the only one feeling the pinch from banks’ reluctance to provide necessary services. Many businesses that offer supporting services or products but do not participate directly in cannabis cultivation or distribution are experiencing similar challenges. Canadian banks seem reluctant to provide financing even to these collateral industries, further inhibiting the overall development of the burgeoning cannabis ecosystem.
Delayed Payments Adding to Pressure
Canadian financial institutions’ hesitance to issue credit cards and virtual payments has led to some companies resorting to slower cash-based transactions. In turn, this causes delayed payments and added pressure on organizations trying to meet payroll, supplier obligations, and other financial commitments.
Government and Regulatory Response Required
As the dissatisfaction with banks’ unwillingness to support the legal cannabis space rises, government authorities and regulatory agencies must take action. Ensuring equal access to financial resources and embracing the potential economic opportunities offered by the growing industry are crucial steps toward sustaining healthy marketplace competition. It’s time for Canada to address these concerns and make concerted efforts to capitalize on the international groundwork it laid when becoming one of the first nations to legalize cannabis nationally.
A Make-or-Break Moment for Legal Cannabis in Canada
Currently, the disconnect between the financial sector and the legal cannabis industry jeopardizes the future of legitimate cannabis businesses, potentially convincing entrepreneurs to explore unregulated markets instead. If Canada wants to reap the benefits of being a pioneer in this emerging industry, it needs to address these critical issues facing cannabis businesses and create an environment that fosters sustainable growth, innovation, and equal access to financial services. Now is the time for Canadian regulatory agencies and banks to take collective action and lead the way in embracing the potential of a thriving legal cannabis market.
Rita Ferreira
Rita is a seasoned writer with over five years of experience, having worked with globally renowned platforms, including Forbes and Miister CBD. Her deep knowledge of hemp-related businesses and passion for delivering accurate and concise information distinguish her in the industry. Rita's contributions empower individuals and companies to navigate the complexities of the cannabis world, and her work remains a valuable resource for those seeking a deeper understanding of its potential.
