Mandelbaum Barrett PC is proud to launch a pioneering initiative as part of our Cannabis, Hemp, and Psychedelics Practice Group: cannabis banking. This move comes as a strategic response to the growing legalization of cannabis and the persistent challenges businesses face in accessing banking and payment services. Since 2014, our Cannabis Practice Group has represented cannabis businesses and financial partners, consistently securing a competitive edge in this rapidly evolving market.
Financial institutions historically shy away from cannabis-related businesses due to the legal complexities at the federal level. However, the potential in this market is both abundant and promising. For instance, in the first quarter of 2024 alone, $201 million worth of product was sold in NJ during the first quarter, and regulated cannabis sales are expected to reach $1 billion in 2024 in NJ alone. The U.S. cannabis industry is projected to add $112.4 billion to the economy, with projections of over $200 billion by 2030.
Despite the opportunities, the inability to lend remains a significant barrier. Most banks are hesitant to provide loans because the typical collateral—accounts receivable or product inventory—is tied to what is still federally classed as a Schedule I narcotic. Without traditional financing options, many businesses, especially social equity applicants, face delays in becoming operational. For example, opening a dispensary in states like New Jersey or New York can cost around $1 million for a turnkey operation, while larger cultivation facilities require investments ranging from $15 to $20 million.
Mandelbaum Barrett PC is committed to navigating these challenges. By developing comprehensive banking solutions, we facilitate cannabis deposits and lending, enabling businesses to commence operations and contribute to a safe, regulated market that ultimately generates significant state tax revenues. Our solutions are crafted to minimize risks while ensuring full compliance, thus safeguarding both the banks and the cannabis businesses they support.
Our firm’s deep-rooted experience and history of setting precedents in New Jersey’s most challenging cannabis regulation court cases position us as a trusted ally in the cannabis sector. By partnering with Mandelbaum Barrett PC, financial institutions can access these lucrative opportunities with the confidence that they are supported by experienced professionals dedicated to their success.
Cultivating Compliance, Harvesting Success
At Mandelbaum Barrett PC, we understand that while 90% of cannabis banking is analogous to lending in other industries, the critical 10%—navigating complex regulations and avoiding potential legal pitfalls—is where our expertise becomes invaluable. Our proactive approach ensures that our clients not only survive but thrive in this high-growth industry.
With this new initiative, Mandelbaum Barrett PC continues to demonstrate its commitment to innovation and excellence in the cannabis banking sector, ensuring our clients are well-positioned to capitalize on the high-growth opportunities this unique market presents.