Time to go back to the drawing board on cannabis banking
A worker inspects cannabis hanging in a drying room at the Hudson Cannabis farm in Hudson, NY. Stalled legislation that would clear the way for banks and other investors to access the cannabis industry may create an environment for Congress to think carefully about what a post-prohibition future might look like.
Wanda Sykes had a joke from 20 years ago that strikes me as very prescient: Bemoaning the turmoil from the dot-com bubble and Enron scandal, Sykes said she'd lost confidence in Wall Street.
"I called my broker, I was like, 'Hey, put all my money in weed,'" she said to uproarious laughter. "Price of weed never goes down. That's a real blue chip right there!"
Explaining jokes never makes them more funny, but it's telling that the reason this was so funny in 2003 is the absurdity of a broker devising a cannabis investment strategy. But today there are dozens of firms doing precisely that. What a difference a couple of decades makes.
Despite that investment enthusiasm, cannabis as a consumable commodity is in its infancy unlike the Prohibition era, there was not a large cannabis market in place before it was banned in the 1930s, notwithstanding the considerable market for hemp. And for better or for worse, the growth of cannabis as an investment vehicle has been stymied by its illegality at the federal level; banks, particularly large banks, can't deposit ill-gotten gains, credit cards can't process illegal transactions, and the bulk of the investment world won't put money into ventures that could easily go up in smoke.