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Many of the big banks have ties to the U.S., where medical marijuana remains illegal at the federal level, even though several more states voted to legalize pot during the November U.S. election. The disconnect sent more U.S. investors seeking exposure to the market north of the border.

“We can only finance things that are legal and the consumption of marijuana in Canada today is not legal. Medical marijuana is, but through our process and diligence, we can’t take the risk that it could turn out to be recreational,” said Daniel Barclay, head of investment and corporate banking at BMO Capital Markets. “No matter how much money we could make it’s not worth the risk or the issues.”

The reluctance among big banks to do business with marijuana players is indicative of “ a lack of understanding of the business,” said Neil Maruoka, lead marijuana sector analyst at Canaccord Genuity.

“One of the most significant components of a company’s valuation is its licence. You are not going to risk losing that by selling into an illegal market.”

Those risks haven’t stopped the big banks from eyeing future opportunities, meeting with players and waiting to pounce once the legal recreational market is in place.

The market is set to grow as just 2 per cent of licensed producer applications have been approved, with more expected ahead of the coming recreational market, Maruoka said.