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Early on, many assumed that immediately following federal de-scheduling normal banking would open up and this industry challenge would be over.

However, contrary to prevailing misunderstanding, bankers’ unwillingness to support the industry is shaped primarily by their own prejudice and lack of knowledge. Providing service to new industry sectors, as well as offering new products, is the decision of the financial institution’s board of directors. These boards are typically composed of individuals whose views are most politely described as “mainstream conservative.” They consider marijuana as in the same category as heroin, methamphetamine, and LSD, or at least a gateway to these “harder” drugs. They visualize hippies, schoolyards, their own kids, pushers and refuse to learn more about it. This attitude has evolved some over the past few years as general awareness and acceptance has seeped in. Additionally, the sky hasn’t fallen in for several years now in states with legal programs. There remains, however, significant resistance to recreational sales and usage.

Federal illegality, and the theoretical risk of both civil and criminal penalties, loss of depository insurance, failed examinations and reputational risk, are convenient pretexts for covering their aversion, based upon how a particular board feels about the industry.

Case in point is federal de-scheduling of hemp and hemp-derived products, notably consumable CBD. It remains a regulated agricultural crop without a regulatory framework in place, especially for CBD. And as such, the FDA considers it largely unapproved for human or animal consumption and therefore a federally prohibited product. Even after the 2018 Farm Bill descheduled hemp extracts, it’s still difficult to find banks willing to support this industry without a regulatory framework and guidelines in place they can depend upon. We hoped for at least an initial framework in place by the end of this year, but now with the FDA’s hands full with COVID-19, the wait may be longer.

So even if Washington deschedules marijuana as early as mid 2021, which is in the realm of possibility, it will likely follow the same track as hemp/CBD as a regulated agricultural product without an adequate regulatory framework yet to be worked out. This will then have to be reconciled with whatever framework is in place for hemp/CBD. For example, the arbitrary line of THC content between hemp and marijuana (0.3%) won’t matter anymore if marijuana is rescheduled.

Except for current THC licensees anxious to defend their expensively won turf. What’s going to happen to dispensaries when 7-11s are quickly going to jump on selling pre-rolls and other related mass-market products? And what’s going to happen to licensed cultivators in New Jersey when it’s much cheaper to grow in the Caribbean? Or processors when it’s cheaper to produce in China?

By far the largest of its kind, the Cannabis Banking Financial Network™ works with about 125 of more than 10,000 banks in the U.S. By the time of federal descheduling, general industry acceptance will have substantially matured and a tsunami of these institutions will be interested in banking the industry and its related cannabis businesses. And both bankers and cannabis-related businesses will need experienced seasoned advisory and products to help them navigate this jungle. Even if Fincann captures only 10% of the market, it will increase its banking network relationships tenfold.

Another of Fincann’s major lines of business is B2C and B2B merchant processing, which yields both initial and monthly recurring income averaging about 1% of merchant sale volume. In a $40B industry, 1% of 10% market share equals $40M. Fincann is conservatively projecting achieving less than half that within 18 months post-money. And by deploying rigorous multi-touch point customer acquisition and retention, this figure will continue to grow irrespective of federal de-scheduling and future regulatory frameworks.

In addition to the just highlighted merchant processing component, Fincann has beta-tested and will enjoy a number of other complementary revenue streams summarized in formulaic detail in the Financial Plan section of our formal business plan under Key Assumptions. These include:

• Banking & merchant processing advisory services across all industry sectors, from whom we collect modest application, consultation and account setup fees
• Legacy banking advisory, though less frequent, entails substantial commissions and advisory fees
• Revenue share from depository institutions of deposit processing and compliance fees charged to THC licensees and large Tier 2 depositors

Not included in the formal financial plan is provision for referral fees and revenue share for outside complementary services, such as financing, insurance and professional services.

Given our extensive network, cross-industry relationships and excellent cannabis and banking industry reputation, achieving 10% market share within a year and a half post-money is conservative, achievable and fully supports our projections.