New Mexico’s marijuana industry struggles with banking and insurance hurdles despite legalization
LAS CRUCES, New Mexico (KVIA) - As the marijuana industry continues to expand across New Mexico and worldwide, businesses and entrepreneurs are facing a series of banking and insurance coverage challenges. Despite cannabis being legal for recreational or medicinal use in 37 U.S. states and the District of Columbia, federal law still classifies it as a Schedule I substance. This classification is causing conflicts for the growing industry.
Financial institutions, such as banks and credit unions, are hesitant to provide their services to marijuana-related businesses due to the federal illegality of cannabis. This forces many businesses to operate on a cash-only basis, which puts them at higher risk for theft and other crimes. It also makes securing loans, paying taxes, and conducting other financial transactions typically associated with running a legitimate business difficult.
These limitations extend to the insurance sector as well. Many insurance companies are unwilling to provide coverage for marijuana-related businesses, leaving these businesses vulnerable to various liabilities and risks. Without access to comprehensive insurance policies, dispensaries face the potential for significant financial losses due to theft, property damage, or other unforeseen events.
Industry experts and lobbyists have been advocating for change on the federal level to resolve these banking and insurance issues. The Secure and Fair Enforcement (SAFE) Banking Act, proposed several times in recent years, aims to protect banks that work with the marijuana industry from federal penalties. The passage of this legislation would mark a significant step forward for the marijuana industry, allowing businesses to access traditional banking services and expand their operations.
While the marijuana industry awaits federal action, state regulators have been working to create workarounds for their local dispensaries, such as establishing state-chartered banks and credit unions that cater specifically to the cannabis sector.
In the meantime, the marijuana industry will continue to grapple with the challenges of operating without access to traditional banking and insurance services. As more states legalize cannabis and the market continues to expand, the pressure on federal lawmakers to resolve these issues will likely intensify.
