Citigroup in recent weeks has reviewed its position on banking marijuana companies or transactions, as large competitors find ways to take advantage of the industry's rapid growth, according to people with knowledge of the matter.

As more states legalize cannabis, more and more banks are looking for reasons to work with an industry that's projected to reach $75 billion in the US alone by 2030

Cannabis is still illegal in the US at the federal level, making it tricky for US banks to service companies from the industry.

Citigroup has held talks in recent weeks about how closely it should work with cannabis companies or clients in other industries who want a loan to invest in the marijuana market, according to people with knowledge of the talks.

One particular meeting earlier this year involved Bradford Hu, the bank's chief risk officer, Ed Skyler, global head of public affairs, and Jamie Forese, the firm's president and head of the unit that houses the investment bank, according to one of the people. All three sit on the firm's operating committee.

The executives had seen competitors participating around the edges of the industry, such as by financing purchases of stakes in cannabis companies, and wanted to be proactive in considering how they'd respond if a client came to them with a similar request, one of the people said.

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Another meeting in February involving more junior staff focused on reputational issues that might arise from working with an industry that's hung up in a legal gray area, according to a second person. Citigroup conducted a similar review over its involvement in the Dakota Access Pipeline, an oil pipeline routed through Native American lands that sparked months of protest.

The senior executives ultimately decided against setting a firmwide policy. Citigroup will continue to take action on a case by case basis and in full consideration of federal laws, one of the people said. A spokeswoman declined to comment.

As more states legalize cannabis, more and more banks are looking for reasons to work with an industry that's projected to reach $75 billion in the US alone by 2030. More than 430 US banks count cannabis companies as clients in one way or another, according to a December report from the Treasury Department. Another 113 credit unions work with the industry, according to the report.

Read more: Big asset managers like BlackRock are sitting on the sidelines of the $75 billion US marijuana industry because of one big pain point

And some larger banks are beginning to find ways to make money from the industry's growth. JPMorgan provided financing to Altria Group for its purchase of a minority stake in Canadian pot producer Cronos Group in December. Lazard Ltd.'s Canadian subsidiary represented Cronos.

Bank of America provided financing to Constellation Brands for its $4 billion investment into another Canadian pot cultivator Canopy Growth. Goldman Sachs advised Constellation on the purchase, while Greenhill & Co's Canadian subsidiary advised Canopy Growth.

Citigroup and other banks are also grappling with whether or not they should act as prime brokers to hedge funds that specialize or invest in US cannabis companies, according to a third person with knowledge of the firm's deliberations.

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