State Spotlight: Where are the New Cannabis Banking Opportunities?

Young cannabis markets are growing, new states are coming online, and every business in those markets needs reliable cannabis banking and financial services. If your financial institution is mulling over the decision to serve this new market, you need to go where the opportunities are the largest.

Keep an eye on these states, where the cannabis industry is poised to take off and demand for financial services will be immense. We’ve divided this list into three distinct categories: new cannabis markets, growing cannabis markets, and states where adult-use legalization is a hot topic.

States with new adult use cannabis markets

When adult use cannabis markets first come online, there’s a surge in new business starts that will need banking and financial services. All of these companies, both plant-touching and ancillary, established and new, need funding, banking, and financial services. This creates a big opportunity for any organization that can meet those demands.

Financial institutions eyeing new adult use cannabis markets should consider the following states.

Minnesota

Adult use sales are expected to begin in Minnesota in early 2025, according to Charlene Briner, the state’s interim director of the Office of Cannabis Management. If the state meets that timeline, Briner said, the state would likely begin accepting license applications from entrepreneurs by Q4 2024.

The state has currently outlined 12 different license types, including licenses for retailers, wholesalers, cultivators, manufacturers, testing laboratories, transportation services, and delivery services. The adult use cannabis market in Minnesota is projected to drive $550 million in sales in its first year and reach $1.54 billion by 2029.

Ohio

Ohio has yet to issue adult-use cannabis licenses. However, state officials have suggested a streamlined process to convert existing medical cannabis businesses into dual-use locations, which could see consumer-facing sales as soon as summer or fall 2024. Following the initial round of dual-use licenses, the state will issue up to 40 cultivation licenses and 50 retail licenses to new cannabis businesses in a future round, though it is unclear when that process would occur. The adult use cannabis market in Ohio is projected to reach $4 billion in value by 2028, according to projections by MJBizDaily.

States with accelerating cannabis sales

States with quickly-growing legal cannabis markets need financial support, particularly in the form of cannabis banking and payment processing. These markets are driving a lot of sales and the pace is only increasing, so they need a way to support these transactions and a place to safely deposit their cash.

Financial institutions that want to capitalize on increasing demand in fast-growing markets should investigate the opportunity in these states.

Missouri

Missouri is a rapidly growing cannabis market, with more than $2.29 billion in combined medical and adult-use cannabis sales since the state first legalized it. In 2023, Missouri consumers purchased more than $1.3 billion of cannabis products, a record that will likely be broken in 2024. In March 2024, the state broke its monthly sales record, grossing $108.7 million in adult-use sales alone. The numbers suggest that the market is rapidly accelerating.

New Jersey

The Garden State is driving some serious cannabis business, with total sales over the last six years eclipsing $2 billion. The pace of sales is increasing, too: $800 million of those sales came in 2023, an increase of nearly $250 million compared to the year before. That trend is expected to continue, as projections suggest New Jersey is on track to surpass $1 billion in sales for 2024.

New Mexico

New Mexico recently surpassed $1 billion in total cannabis sales since the legalization of adult-use cannabis in April 2022. The state’s cannabis industry is sizable, with 1,050 licensed retailers, 878 manufacturers, and 459 small scale producers, giving financial institutions a lot of potential customers to support. And, with 21 million transactions, there’s a lot of opportunity for payment processors in particular.

Maryland

Maryland launched its adult-use cannabis market in July 2023 and, in the second half of the year, drove $331.8 million in sales. When combined with medical cannabis sales, Maryland’s total sales reached $796.3 million. Those numbers are expected to grow quickly — adult-use sales alone are projected to reach $2.1 billion by 2027, according to projections from MJBizDaily. The number of operators is also expected to grow; Maryland could issue up to 75 more retail licenses in 2024, giving financial institutions opportunities to onboard new businesses and grow alongside them.

States considering legalization bills or upcoming ballot initiatives

If you’re looking to get in on the ground floor of a brand new cannabis market, it’s important to plan early and keep an eye on legislative activity and upcoming ballot initiatives. These states are expected to include a cannabis legalization referendum on their ballots this November. They could be great opportunities for FIs that want to get a foot in the door of a new market early.

Florida

Amendment 3 is Florida’s cannabis legalization initiative scheduled for the November 2024 election. If adopted, adults 21 years of age and older would be able to purchase and possess up to three ounces of cannabis. As the largest medical cannabis market in the U.S., there’s a lot of anticipation around the potential of adult-use operations.

The Sunshine State’s market could be immensely valuable, too. Projections from Headset suggest it could drive between $4.9 and $6.1 billion in sales in just the first year. Early polls suggest the ballot initiative may not go the industry’s way, however; 56 percent of Florida’s voters oppose the measure, according to a USA Today/Ipsos survey.

Pennsylvania

Legislators in Pennsylvania recently filed bills in the state’s House and Senate that would legalize adult-use cannabis. Should the bills pass, the odds look good that Gov. Josh Shapiro (D) would sign them into law — Shapiro previously called on the legislature to legalize adult-use cannabis. The governor’s budget suggests the adult-use cannabis market could raise an estimated $250 million in tax revenue at a tax rate of 20%. If accurate, that would mean the market could drive $1.25 billion in sales.

South Dakota

An upcoming ballot initiative to legalize adult-use cannabis in South Dakota is scheduled for the November 2024 election. This is the third such referendum voters will consider, after a successful attempt in 2020 was overturned by the state’s Supreme Court and a failed attempt in 2022. The state’s existing medical cannabis market is young and small, so adult-use legalization could represent a big opportunity for financial institutions that want to help build a market from nearly the ground up.

Resources for cannabis financial institutions

If you’re preparing to launch your cannabis banking program or another financial service, these resources from the Green Check blog could be helpful for you.

• What Lessons Can You Learn From Other State Programs? No two states are the same in cannabis, but there are parallels you can learn from. Check out these lessons to take away from states with existing cannabis markets so you can get started on the right foot.
• How To Use Deposit Data For Cannabis Banking Success: When you’re launching a cannabis banking program or cannabis financial services, data is king. Learn more about what to look for and how you can use tools like Green Check Verified to gain a competitive advantage.
• FinCEN Compliance Made Easy: When you’re working with cannabis businesses, compliance is critical. This guide will help you understand how to turn regulatory compliance into a manageable task instead of a heavy lift.
• Can You Beat The Cost of Funds for Cannabis Deposits? When launching any new program, the big question is whether it can be profitable. This guide will explain how you can set up your cannabis banking and financial services program for success from the start.
• Why You Should Earn the Leading Cannabis Banking Accreditation: To give your team the edge when it comes to offering cannabis banking and financial services, you need the leading cannabis banking accreditation. Check out the details about the foremost program in cannabis finance that can set your team apart from the competition.

Breaking into cannabis finance? Green Check can help

There’s no shortage of excitement in the cannabis industry, where the landscape is always changing and new markets constantly emerging. Whether you’re new to offering cannabis banking and financial services or you’ve been involved for some time, having a partner by your side to help you navigate each unique market is an invaluable thing. That’s where Green Check comes in, from offering you data that provides the clearest picture of your market to helping you connect with verified cannabis operators. We’ll help you take your business to the next level and better serve cannabis customers with the financial services they need to succeed.