“There are a lot of really good players that have a lot of really great ideas and have need of financial services,” Smith said.
One industry that has been starved for access to traditional bank financing is cannabis. The inability to get loans or any kind of services affects small pot businesses, which have to pay steep state licensing fees just to get started, said Byron Bogard, a California-based cannabis dispensary owner and grower.
Although licensed, his dispensary, Highway 33, has relied on private loans from individuals, often at much higher interest rates than banks, to get up and running. Lack of financing also affects how he can expand his business and makes it difficult for him or his employees to get bank accounts or cash checks.
Banks operating in the U.S. are insured by the Federal Deposit Insurance Corporation, and companies that violate federal law will not be insured. Despite decriminalization in many states, marijuana remains a Schedule 1 controlled substance at the federal level, and most banks won’t loan to dispensaries or other cannabis businesses.
Bogard’s experiences are common across the industry, according to Morgan Fox, a spokesman for the National Cannabis Industry Organization, a trade association. Fox said that without access to traditional lending, many marginalized communities involved in the industry have difficulty raising capital to start a business and the Fair Access to Financial Services rule would be step in the right direction.