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“If you look at Canada’s financial services, the majority of these institutions aren’t getting behind the industry,” says Rob Paterson, president and CEO of Alterna Savings and Alterna Bank. Alterna was one of the first financial services to open its doors to both kinds of green, and in so doing, became a beacon for aspiring cannabis ventures.

From bank-less to some progress

Photo by Elijah-Lovkoff / iStock / Getty Images Plus

“A few years ago, the big banks started closing accounts when they realized they were connected to cannabis… they were bank-less, and basically left to stuff their money into their mattresses because no one would support them,” Paterson says, adding that there’s nothing legally preventing Canadian financiers from working with cultivators and other members of the cannabis sector. “This isn’t a case of ‘we’re going into a fringe business here’. You can absolutely provide services to those licensed entities.”

Paterson suggests that while the tide is slowly turning, the banks’ sluggish pace is hurting businesses at a time when they need them most.

“Even with the huge amounts of capital flowing into the space, companies are restrained on the types of capital available to them,” says Harrison Phillips, vice-president of Viridian Capital Advisors in New York, who currently leads the company’s data collection and analysis projects, the Viridian Cannabis Deal Tracker and the Viridian Cannabis Stock Index.

Philips reports that conventional financings like mortgages, small business loans, purchase/inventory financing and others are almost non-existent in the cannabis realm.

“Assuming these instruments were available to cannabis businesses, the industry would benefit since companies wouldn’t be so dependent on cash transactions, like buying million-dollar extraction machines or acquiring and developing real estate,” he notes.