America is edging closer to cannabis reform. So far, 33 U.S. states have legalized cannabis for medical purposes, and 10 U.S. states and Washington D.C. have legalized the plant for adults aged 21 and over.

Uncle Sam might be turning a verdant shade of green, but one main problem remains for legal weed businesses nationwide: lack of access to cannabis banking services. Since cannabis remains a Schedule I drug, financial institutions are unlikely to risk doing business in the legal weed sector until the plant is legalized at the federal level.

Sure, U.S. cannabis companies might be experiencing a surge in their market value amidst the rise of legalization, but they are more financially restricted than pot companies in Canada.

Two pieces of legislation could encourage banks to provide cannabis banking services

On April 4, 2019, the STATES Act was reinstated. This important piece of legislation could simplify the process of operating a cannabis company if the legislation is approved by a Republican-dominated Senate.

The STATES Act would mean that the Controlled Substances Act no longer applies to states that have legalized the green plant; safeguarding the legal weed industry from the threat of federal prosecution. If it passes, banks and various stock exchanges will, at the very least, consider dabbling in cannabis deals. Not everybody is sold on the idea, however.

“We are not convinced that the STATES Act would even be enough to convince banks to service legal cannabis companies,” says analyst Jaret Seiberg from investment banking firm Cowen, adding that, “It is why we see better prospects for narrower bills like the SAFE Act on cannabis banking.”

The SAFE Banking Act would prompt commercial banking institutions to provide their services to cannabis companies that conduct business operations in accordance with state rules and regulations. However, it will not amend the federal prohibition of cannabis.

Canadian bank executives won’t touch U.S. cannabis companies until law changes

Bank executives in Canada claim that they are not likely to get involved with American cannabis industry players until laws are changed at the federal level. America’s northern neighbor, Canada, is home to an abundance of cannabis companies that are legally working with the Great White North’s major financial institutions. The same cannot be said for the United States, which is inexperienced in the cannabis banking sector.

The first Canadian bank to get involved in the legal weed industry was Bank of Montreal, which funneled $150 million dollars of equity financing into Canopy Growth Corp early last year. Since this time, it has done business with various other cannabis companies.

The bank has confirmed it would consider broadening cannabis banking services to the States, but only on the condition that cannabis is legalized at the federal level.