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CannaNative Wants to Bank the Unbankable

Ryan Allway

October 16th, 2015

Policy, Top Story

Cannabis businesses may be generating plenty of revenue with recreational and medical marijuana legalization becoming increasingly commonplace, but business owners are struggling to find a place to deposit their cash in a federally-regulated banking system.

According to the Treasury Department, financial institutions in more than 25 states filed more than 1,700 reports for marijuana-related businesses receiving traditional banking services, following federal initiatives last year to ease access. The problem is that nearly as many reports have also been filed terminating service with a marijuana business, suggesting that many banks are getting cold feet when it comes to banking the sector.

These trends have left many cannabis businesses in a perilous situation with lots of cash (and pot) on hand that has made them a popular target for criminals. Ironically, many businesses have a hard time keeping track of their cash sales and paying the proper taxes as a result, making it difficult to comply with state laws and ensure the government gets paid. And, these trends are unlikely to change until a cohesive federal law is passed regulating cannabis.

Sovereign Solutions

The U.S. banking sector may not have a good solution, but sovereign nations within the U.S. are looking to capitalize on the $3 billion industry.

CannaNative is trying to link tribal leaders from the 566 sovereign Indian nations, which aren’t subject to U.S. banking laws, with finance professionals and legal marijuana businesses. By leveraging their expertise in managing casinos, the group hopes to create banks or credit unions to tap the market that U.S. banks wouldn’t touch. The opportunity could be enormous given the industry’s already-large size and rapid growth rates over the years.

The organization aims to emulate the casino model of the 1980s by hiring cannabis company managers to teach tribes how to setup financial institutions for the new industry.

“When Indian gaming became legalized, tribes didn’t know how to run casinos, so many companies that knew how to run gaming operations became managers of the tribal enterprise until the tribe figured it out,” said Anthony Rivera Jr. of CannaNative to Bloomberg.

The market for banking services could be especially lucrative given the added value that the banks can provide over time, such as asset management services, where they could generate a predictable return on the total assets under management.

Helping Hands

The Native American move into cannabis banking isn’t the first move that tribes have made into the industry since legalization has taken effect.

The Flandreau Santee Sioux Tribe detailed plans to sell cannabis in June after signing a contract with Denver-based Monarch America Inc., which will help with the design, construction, and development of an indoor growing site that features a marijuana consumption lounge. Tribal leaders believe that the facility could generate a monthly profit of $2 million and will operate next to its already up-and-running casino on the land.

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Many companies providing these types of services to tribes receive a fixed percentage fee of net revenue for consulting services related to building, training, operating, and providing other services to the facilities. For instance, Terra Tech Inc. [stockquote symbol=TRTC] is reportedly in discussion with 10 tribes or groups that are weighing their options, as of earlier this year.

In the case of banking the marijuana industry, companies could see these same kind of dynamics where U.S. companies could generate consulting income by helping sovereign nations implement these kinds of win-win programs.

Looking Ahead

The cannabis banking industry is ripe for the picking and sovereign nations are well positioned to capture the opportunity given their unique status. CannaNative has been making tremendous strides in pushing forward this approach to begin diversifying casino revenue into banking services revenue over time.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

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