Why major Canadian banks remain cool to the red-hot cannabis sector

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Major banks, with the exception of Bank of Montreal, appear to be exercising a significant degree of caution when it comes to providing their full suite of services

Original article: https://www.thegrowthop.com/cannabis/why-canadian-banks-remain-cool-to-the-red-hot-cannabis-sector/wcm/83a99646-75f1-480c-b6b4-1108524f3b68

Cannabis might be legal in Canada now, but major Canadian banks — with the exception of the Bank of Montreal — appear to be exercising a significant degree of caution when it comes to providing their full suite of services to the cannabis sector.

It is unclear if this is due to lingering stigma about the drug itself on the part of the banks or a trepidation about the long-term viability of certain companies, or whether they are wary of finding themselves in trouble with U.S. regulators where they have sizeable operations.

But interviews with the heads of seven of the biggest licensed producers — with a cumulative market cap of over $20 billion — paint a picture of how cannabis companies are still struggling to garner full access to banking services provided by Toronto-Dominion Bank, Royal Bank of Canada, Bank of Nova Scotia and Canadian Imperial Bank of Commerce.

“You check every box, and they still don’t like you,” said Bruce Linton, CEO of Canopy Growth Corp. “They are opening up, but reluctantly. What I need is everything that they do.”

Just weeks before legalization, Linton says he was scheduled to meet with “very senior executives” at one of the Big Five banks. “I said, ‘okay, good, I’ll come, I’ll tell you what this whole thing is about.’ And then suddenly, they said, ‘don’t come’.”

Canopy has banked with the little-known Ottawa-based Alterna Savings & Credit Union Ltd. since 2015, after being shut down by all the five major banks, years ago. Alterna, for its part, has become a major financial player in the pot sector, which as of April 2018, was offering bank accounts to “at least two-thirds of almost 100 licensed producers in the business,” according to Bloomberg.

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