Bank of Montreal and Toronto-Dominion Bank are emerging as the banks of choice for Canada’s burgeoning marijuana industry, even as some lenders shun the sector.
With less than a year to go before Canada plans to legalize recreational pot in July, and 16 years after making it legal for medical use, Bank of Montreal and Toronto-Dominion are providing business accounts to at least 21 cannabis companies, according to interviews with 45 firms tied to the drug. Alterna Savings and Credit Union Ltd. is top among co-operative lenders.
Canadian banks are warming to an industry avoided by banks in the U.S., where marijuana is outlawed federally. Most U.S. banks have refused to do business with pot companies to avoid accusations of money laundering and other criminal violations that could bring jail time.
Canada’s recreational pot sales are forecast to reach C$6 billion ($4.8 billion) by 2021, surpassing the C$1.3 billion estimate for the mature medical marijuana market. Ontario’s government is already forging ahead with plans to set up its own weed stores, though using the drug for pleasure still carries a social stigma in many circles.
“Different lenders have been quicker than others to move into this industry, but this is understandable as public perceptions are still evolving," Basem Hanna, chief executive officer of Mississauga, Ontario-based TerrAscend Corp. said by email. “There could be a significant first-mover advantage to the financial institutions that are getting involved with the legal cannabis industry already."
Bank of Montreal provides accounts to at least a dozen companies, including Aphria Inc., CannTrust Holdings Inc., and Invictus MD Strategies Corp., as well as investment firms Cannabis Wheaton Income Corp. and CannaRoyalty Corp.
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