Tuesday, February 20, 2024

How Does Legal Weed Affect Banking Activity? News Study Has Answers

A new study examined how the legalization of cannabis at the state level affects deposits and lending activity of banks in legalizing states.

After analyzing bank data over the course of several years, researchers have concluded that recreational cannabis legalization caused a spike in deposits and lending.

Researchers collected data from more than 150,000 regulatory filings from banks across the country in states with legal marijuana between 2011 to 2016, finding a significant increase in deposits and lending after recreational cannabis was legalized. They found that in states with legal cannabis, bank deposits increased by 3% or 4% while bank lending increased from 6% to 8%, a small yet significant change.

“We attribute this finding to either limited concern about the perceived riskiness of deposits surrounding cannabis legalization, or optimism that policies would be adapted to limit banks’ risks from regulatory uncertainty,” wrote the study’s authors.

Banking Activity Grows In States With Legal Marijuana
Photo by Scott Graham via Unsplash

RELATED: Study: Legalizing Marijuana Results In Major Tourism Spike

“Although we are unable to specifically identify whether the higher level of deposits is due to the acceptance of deposits from cannabis-related activities and whether banks knowingly accept these types of deposits, our findings suggest that the risk from regulatory uncertainty did not decrease banks’ willingness to accept deposits or make loans.”

Whatever the cause of this increased bank activity, it’s clear that legal cannabis is good for business.

RELATED: Study Now Finds Marijuana Legalization Decreases Property Value

Cannabis’s status as a federally illegal drug not only impacts cannabis businesses, it also impacts the amount of money and the permits that are necessary for its research. The system that’s now in place in the U.S. is one that limits cannabis capabilities as a business and as medicine.

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