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Think about the last time you ran out for a bottle of wine or stopped someplace after work for a few groceries: Did you have to swing by an ATM first? Did you make sure you had plenty of cash in your wallet to cover the cost?
If you're like most Americans in 2018, the answer is probably... of course not.
It's more likely you used a debit or credit card, or even iOS, Android, Venmo, or PayPal. A debit here, a credit there, all effortlessly unfolding in the ones and zeros of cyberspace.
I'm simplifying here, but the cashless, convenient transaction between you and the merchant took place via computer - your bank, the merchant's bank, the clearinghouse - everyone involved used the U.S. communications network and financial system to "settle up" and get business done.
Now, I'm going to ask you to imagine something completely ridiculous - just for a second.
Then I'll show you how you can clean up on unique solutions to the legal weed sector's biggest problem...
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Legal Cannabis Is Banking in the Twilight Zone
Now, imagine if that simple electronic transaction - for chardonnay, or almond butter, or paper towels - left the merchant, and the participating financial institutions were exposed to very stiff federal money laundering or racketeering charges.
As for you: You could be up for an unfriendly visit from some stone-faced G-men yourself.
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And all because, in this weird story, paper towels are perfectly legal where you live, but are prohibited by federal law. And the digital money used to transact business not only crossed state lines, but was "touched" by federally chartered banks.
If that sounds completely outrageous to you, it's a scenario faced by millions of otherwise totally law-abiding marijuana consumers every single day, in every single state in the Union where marijuana is legal for medicinal and/or recreational use.
In 2018, legal marijuana is largely a cash business because there's no alternative, save for a few scattered "homebrewed" third-party apps and payment portals where factors like security and cost are still open questions.
That brings a whole host of problems and headaches to consumers and retailers alike. Customers often have to pony up an extra 1% or 3% to use onsite dispensary ATMs. They face the added security risks of carrying dollar bills.
For retailers, it can be even worse, dealing with the sheer volume of cash. It's not unrealistic to think that, somewhere out there in America right now, a legitimate marijuana business owner or employee is literally stuffing greenbacks into mattresses or under floorboards because their bank won't touch their business proceeds with a ten-foot pole.
As you can see, it's a huge, costly problem - and a drag on the entrepreneurship that keeps the American economy going.
It's tough to blame the banks here. They're largely risk-averse organizations, and cannabis is still illegal at the federal level. A bank taking on a cannabis business client runs the risk of violating federal laws by doing so.
The pressure on banks in this regard was ramped up by former Attorney General Jeff Sessions, who rescinded the Obama-era Cole memo that prohibited the federal government from interfering with the laws in cannabis-friendly states.
But that's about to change in a big way. There have been some incredible developments in Alaska, of all places...
The 49th State Could Be No. 1 for Marijuana Banking
Credit Union 1, an Anchorage, Alaska--based credit union with branches across the entire state, just announced its new pilot program to begin coordinating financial services for marijuana-related businesses (MRBs), including a few cannabis dispensaries.
In a press release, the company stated that by setting up this pilot program, it's not taking a political or moral stance on marijuana, but is simply seeking to meet the needs of all its members.
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For starters, Credit Union 1's program will offer accounts allowing deposits and withdrawals to a few marijuana businesses. Eventually, the bank would provide them payroll operations.
"When it comes to our members, we always seek to meet the financial needs of those we serve without judgment or prejudice - and as a state-chartered credit union that only serves Alaskans, we are in the best position to provide this service for MRBs," the bank stated.
That's great news for Alaskan cannabis businesses who've come, as they have in other jurisdictions, to run cash-only operations.
And Credit Union 1 isn't the only bank looking to launch such a pilot program. Nor is Alaska the only state looking for solutions.
Buckeye State Bud Businesses Bullseye Banking Buddies
Wright-Patt Credit Union, headquartered near Dayton, Ohio, has said it will be offering "limited banking services" to the state's medical marijuana companies.
While the Wright-Patt Credit Union hasn't outlined what specific services it will offer, its move here is still a positive step forward for cannabis companies that are longing to transition away from a cash-only business model.
In just about every case, it will be community banks stepping in to fulfill the surging demand for cannabis, much as Severn Bancorp Inc. (NASDAQ: SVBI) did for Maryland's medical marijuana businesses, allowing "MRBs" that became clients to easily make payroll and use wire transfers to pay for product.
These banks are largely under the radar of federal regulators, too, and generally only have cause to worry if they fall afoul of the various state cannabis regulations. They sport smaller market caps and can be a touch more volatile than the big national and global players, but these small entities have a potential lock on billions in revenue coming their way from state cannabis operators.
Plenty of these community banks are publicly traded, but one way to play this trend easily is the First Trust NASDAQ ABA Community Bank Index (NASDAQ: QABA) exchange-traded fund. It's down around 9% for the year, which isn't surprising given the state of the broad markets, but as a rule, these small banks are very aggressive growers with whip-smart leadership focused on putting money in shareholder pockets. Their outreach to the marijuana business is really "icing on the cake."
The bottom line is this: Whether you seek out individual community banks to buy or go the "one-stop shop" route with QABA, there's plenty of upside in store as small banks and legal weed businesses take the first tentative steps toward more durable relationships.
These 3 Stocks Are the Key to 2018's Greatest Profits
The 2018 midterm election was a turning point for the cannabis industry.
We expect nothing short of historic profits by the end of the year.
But not all pot stocks will hand you life-changing wins. In fact, often the companies making headlines are least likely to see the biggest gains.
These three stocks, on the other hand, are flying under the radar... for now. Each of them could see exponential stock price acceleration at any moment, and if you get in before that happens, you could turn a token stake into a lifetime of wealth.
I don't know of any other sector providing anywhere near this level of growth now.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.