Investors and Banks Agree, Trump Can't Stop The Cannabis Movement
Investors Fly Into Cannabis Despite Political Roadblocks from CannabisNet on Vimeo.
The threat of the orange man on the green industry seems to be nothing more than that: a threat. While Jeff Sessions still intends to crack down on the industry through his “menacing” statements and plans, the industry sees it as something worth ignoring.
In fact there have been two major positive developments in the cannabis industry since Trump took over presidency.
Investors Continue Spilling Money Into The Green Industry
Recent research from New Frontier Data as well as Viridian Capital Advisors revealed that money continues to come in through investors in the industry despite Trump’s anti-cannabis stance. Cannabis companies have earned over $734 million starting January 1 up to April 21, which is around 7x more compared to the $108 million during the same quarter last year.
The increase in investments shows that the industry is more relaxed and optimistic that both Trump and Sessions won’t really have a serious impact on the industry despite the fact that it had an effect on stocks earlier this year. The Bloomberg Intelligence Global Cannabis Index dropped 36% this year, after a surge in February. For investors, it seems there is still so much more opportunity than risk when it comes to growth in the industry. The country’s largest state, along with 7 other states, legalized cannabis last November 9.
California is expected to see a much larger demand in legal cannabis, estimated to gro as much as 50% come 2018 which is when recreational use is set to take place and go online. Based on the report the authors also assume that nationwide demand for legal cannabis has the potential to quadruple by 2025.
According to John Kagia, executive VP for analytics in New Frontier and author of the report: “With each state that legalizes, the need for capital is going to be there.” He adds, “It will continue to represent a substantial investment opportunity for the foreseeable future.” New Frontier’s CEO Giadha Aguirre de Carcer also mentioned that competition in funding is resulting in more seed capital growing more than ever, which is also becoming more costly.
The surge in investments happened despite the vague policy under a Trump presidency. In February, Sean Spicer said that the DOJ was expected to keep a closer look on federal law enforcement when it came to recreational cannabis use even when it’s legalized in a certain state. Despite Spicer’s defense of medical cannabis, Sessions has long been open that he didn’t want anything to do with the plant.
There’s still a lot of fear, but despite this people are still looking forward to bright days ahead in the industry. According to Sean Greiper, founder and president of Viridian, said in the report that “a day doesn’t go by where an investor hasn’t asked us about the potential impact of Mr. Spicer’s comments in particular, and the Trump administration in general.”
More Banks Accepting Accounts From Cannabis Businesses Under Trump Presidency
Despite the fact that cannabis is still illegal at the federal level and banks won’t open accounts from green businesses because of this, the circumstances are slowly improving. These days, banks are now more willing to take the risk by accepting cannabusiness accounts even if Sessions has repeatedly said he’s been meaning to crack down on the industry.
According to the Financial Crimes Enforcement Network (FinCEN), 368 credit unions and banks activated cannabis-related accounts as of March 2017, which shows a 10% increase since January. From February to March, there were 34 new banks that welcomed cannabis accounts, marking a significant milestone in the industry despite the hurdles of banking and financing that cannabusinesses have to face.
Although more banks are willing to take the risk by accepting green money, most banks still don’t want to have anything to do with the plant. Recently, Congressmen Darren Soto and Matt Gaetz proposed bill amendments for a financial measure so that federal banking agencies would be prevented from giving consequences to smaller banks that are willing to work with the cannabis industry. The bill, called the Financial CHOICE Act of 2017, was intended to reduce regulations of the 2010 Dodd-Frank legislation which would protect America from financial disasters like the stock market crash which occurred in 2008.
Despite this proposal, the House Rules Committee blocked the amendment.
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