Industry needs unfettered and legitimate access to capital markets.
Mike Schuster 21, Assistant Professor of Legal Studies at Terry College of Business at the University of Georgia; Robert Bird, Professor of Business Law and Eversource Energy Chair in Business Ethics at the School of Business at the University of Connecticut, 4/1/2021, “Legal Strategy During Legal Uncertainty: The Case of Cannabis Regulation,” Stanford Journal of Law, Business, & Finance, 26(2), pp. 406-407, Lexis, kav
Second, cannabis firms must have unfettered and legitimate access to networks in capital markets. Cannabis is a growth industry, with some cannabis stocks quickly transforming themselves from penny stocks to highly-desirable securities. 311Some firms have reported astounding growth, with returns between 2000% and 7500% reported over a three-year period. 312Such growth is of course unsustainable, and [*407] cannabis stocks are, as one writer described, "fraught with big time risks, hefty volatility, [and] zero profits ... many marijuana stocks are just speculative bets." 313Exchange traded funds ("ETFs") tied to cannabis firms have posted 50% losses within a short period of time. 314 In spite of this volatility, investors are still bullish on the long-term prospects of the cannabis industry. 315 This is in part because unlike some tech stocks that needed to create a market for their inventions, cannabis firms already have a substantial demand for their products in North America. 316
No matter how optimistic investors may be about future growth, cannabis firms cannot reach their potential without unfettered access to capital markets. 317Cannabis firms still struggle to find a bank that is willing to provide them with basic financial services. 318 This barrier represents a "mark of condemnation" that forces firms to deal largely in cash, which increases the risk of robbery as well as the difficulty to pay taxes or complete other transactions that do not accept cash payments. 319Banks are also reluctant to lend to cannabis firms, recognizing the possibility that the federal government could seize a firm's assets and leave the lender nothing to collect from the loan. 320