{"id":13937,"date":"2025-04-22T20:28:12","date_gmt":"2025-04-22T20:28:12","guid":{"rendered":"https:\/\/finderica.com\/?p=13937"},"modified":"2025-04-22T20:28:12","modified_gmt":"2025-04-22T20:28:12","slug":"inside-the-100-billion-underserved-market","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=13937","title":{"rendered":"Inside The $100 Billion Underserved Market"},"content":{"rendered":"\n
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<\/p>\n

Fintech (financial technology) <\/p>\n

<\/fbs-accordion>getty<\/small><\/figcaption><\/figure>\n

Fintech stepping in where traditional banks have stepped out<\/h2>\n

In early 2023, the CEO of a thriving CBD company in Colorado opened their laptop to a gut punch: their bank had shut down the company\u2019s account. No warning. No appeals. Just a dead end\u2014and a scramble to meet payroll, pay vendors, and stay afloat.<\/p>\n

This isn\u2019t some fringe example. Across the U.S., thousands of legal businesses wear the \u201chigh-risk\u201d label and are quietly excluded from basic financial services\u2014not because of any wrongdoing, but simply the industries they operate in: cannabis, firearms, crypto, adult content. And few face steeper barriers than cannabis businesses. Even with state-level legalization and proper licensing, most are relegated to bare-bones banking. The full financial stack\u2014lending, investing, credit cards\u2014remains out of reach due to federal prohibition and institutional risk aversion.<\/p>\n

The result? A $<\/em>100 billion<\/u><\/em><\/a> bottleneck<\/em>\u2014anchored in cannabis but rippling across crypto, firearms, and adult content. It\u2019s a structural failure rooted in unresolved legal contradictions\u2014perpetuating stigma, entrenching guilt by association, undermining public safety, and blocking financial inclusion. The current administration can right the system\u2014limiting illicit behavior, bringing more activity into the open, and unlocking the economic potential trapped in regulatory purgatory.<\/p>\n

Legal but Locked Out<\/strong><\/h2>\n

These businesses aren’t operating in the shadows. They’re licensed, regulated, taxed, and often major employers. But legal status doesn\u2019t guarantee financial access. In fact, for many of them, it comes with a penalty.<\/p>\n

Cannabis is the clearest example. Legal in 38 states but still federally prohibited, the industry operates in a legal no man\u2019s land. \u201cWe don\u2019t bank marijuana companies because there\u2019s no federal law around it. If there\u2019s a federal law, we probably would,\u201d<\/em> said JPMorgan Chase CEO Jamie Dimon<\/u><\/a> in early 2025\u2014a rare moment of candor that makes the hesitation clear: it\u2019s not moral; it\u2019s legal. Credit card networks<\/u><\/a> like Visa and Mastercard<\/u><\/a> still won\u2019t touch cannabis, forcing dispensaries into cash-heavy operations or \u201ccashless ATM\u201d workarounds\u2014coded transactions that mimic ATM withdrawals, a tactic now drawing increased regulatory scrutiny.<\/p>\n

But the obstacles go far beyond payment friction. Because cannabis remains a Schedule 1 substance, the IRS bars businesses from deducting ordinary expenses like rent, payroll, or marketing\u2014leaving many taxed on gross receipts instead of profit, with effective rates soaring past 70%. “The core obstacle to providing traditional banking services to cannabis businesses is the unresolved conflict between state and federal law,” said Joe Silvia, partner at Duane Morris LLP<\/u><\/a>. \u201cOver the past decade, many of these businesses have become legitimate enterprises serving diverse customers. Yet institutions that choose to serve this industry must do so amid regulatory uncertainty, heightened scrutiny, and elevated risk expectations.\u201d<\/p>\n

Shut out of traditional loans and SBA program<\/u><\/a>s, cannabis businesses<\/u> are often forced to rely on costly private financing\u2014bearing double-digit interest rates, revenue-based advances, or restrictive terms. Even basic banking, when available, comes with inflated fees and strict compliance requirements<\/u><\/a>. Most accounts are limited to in-state operations, cutting businesses off from national scalability<\/u><\/a> and taking advantage of price differences across states. Cash-reliant operations escalate insurance premiums<\/u><\/a> and raise the risk of robberies<\/u><\/a> targeting operators and storefronts. Routine tasks like payroll and vendor payments<\/u><\/a> become logistical minefields\u2014slow, error-prone, and fragile. At any moment, a regulatory hammer could fall. They do everything by the book, yet still live on the edge\u2014banked today, shut out tomorrow.<\/p>\n

These constraints aren\u2019t abstract. They shape real business outcomes. “We’ve done everything by the book, and it’s still a struggle to find basic banking,” said Obie Chambers, a cannabis industry consultant and investor<\/u><\/a> with companies in Oklahoma, North Carolina, and Washington, D.C. \u201cIt took over five years for one of our medical marijuana clients to secure a stable banking partner. And even our federally legal hemp venture\u2014fully compliant under the 2018 Farm Bill\u2014has faced inexplicable roadblocks.\u201d<\/p>\n

This isn\u2019t just a cannabis problem\u2014it\u2019s a $100 billion economic inefficiency hiding in plain sight. Legal businesses are forced to function with primitive financial tools and denied access to the systems every other compliant industry takes for granted. \u201cThe state-regulated cannabis industry has matured into a legitimate, tax-paying, job-creating sector across the United States, but it’s still treated as a criminal enterprise under federal law,\u201d said Khurshid Khoja<\/u><\/a>, founder of cannabis law boutique Greenbridge Corporate Counsel<\/u><\/a>, P.C. \u201cThe SAFER Banking Act<\/u><\/a> isn’t just about access to basic financial services\u2014it’s about ending a decade-long disconnect between federal policy and the reality created by voters and legislatures in a majority of U.S. states.\u201d<\/p>\n

<\/p>\n

Marijuana Industry Banking<\/p>\n

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The Optics Penalty<\/strong><\/h2>\n

Reputational risk has quietly emerged as a powerful form of financial censorship.<\/p>\n

Firearms merchants face similar exclusion from the financial system. Despite being a constitutionally protected industry, they\u2019re routinely rejected by banks and payment processors due to so-called \u201creputational risk.\u201d Legitimate sellers of accessories or ammunition often find themselves debanked as well. Adult content creators\u2014on widely used platforms like OnlyFans or Patreon\u2014have also faced silent bans, deplatformed not by the platforms themselves but by the financial gatekeepers behind them. In 2023, OnlyFans said it would ban<\/u><\/a> explicit content entirely due to financial pressure from credit card processors\u2014before reversing course after public backlash.<\/p>\n

Yet, exclusion from the financial system isn\u2019t just inconvenient\u2014it\u2019s destabilizing. They\u2019re not breaking the law\u2014just caught on the wrong side of perception. Locked out of the system, they\u2019re left scrambling for workarounds: mostly cash operations, high-fee processors, and endless compliance headaches. The result isn\u2019t just inefficiency\u2014it\u2019s a quiet form of financial exile.<\/p>\n

Fintechs Answering The Call<\/strong><\/h2>\n

In the absence of traditional banks, fintechs are stepping in\u2014turning exclusion into opportunity.<\/p>\n

The high-risk payment processing sector now represents a $22 billion market, growing at 24% annually\u2014nearly triple the rate of traditional processors. Specialized firms like Durango Merchant Services<\/u><\/a>, PaymentCloud<\/u><\/a>, and LeisurePay use rigorous risk assessments and strict compliance protocols to serve clients others won\u2019t. “We’ve walked in the shoes of the businesses we serve,” says Chad Elie Sr., CEO of LeisurePay<\/u><\/a>. “When legitimate companies are labeled high-risk and lose access to financial services, the consequences extend beyond the bottom line\u2014hitting morale, reputation, and survival. Our mission is to deliver stable, affordable payment solutions that support economic fairness. Today, more than 2,000 merchants rely on LeisurePay because we provide what others refuse.”<\/p>\n

The catch? It\u2019s expensive. Transaction fees run 5\u20138%\u2014more than double the norm\u2014and reserves are steep. But for many, it\u2019s the only off-ramp from financial exile. A few regional banks are also leaning in. MVB Bank<\/u><\/a>, Evolve Bank & Trust<\/u><\/a>, and Merchants Bank of California<\/u><\/a> have partnered with fintechs to build tailored compliance programs specifically for the cannabis industry. MVB Financial reported a $14.6 million increase<\/u><\/a> in noninterest income in Q4 2024, partly due to revenue from its fintech subsidiary Victor Technologies.\u200b<\/p>\n

A growing number of compliance tech firms are helping regional and local banks offer basic services to cannabis businesses\u2014typically limited to checking accounts, payroll, and cash handling. Firms like Green Check Verified<\/u><\/a>, Shield Compliance<\/u><\/a>, and K2 Integrity<\/u><\/a> provide infrastructure for regulatory reporting, transaction monitoring, and seed-to-sale data validation. But access still depends heavily on geography, business maturity, and bank appetite. Major national banks are still sitting on the sidelines. \u201cIt\u2019s never easy,\u201d Obie<\/u><\/a> said. \u201cThis isn\u2019t like walking into a bank with your ID and opening an account. Some banks won\u2019t even talk to you without a sales history. The big ones? Still a hard no. You\u2019re left with small, local banks\u2014high fees, long waits, and one policy change away from getting shut out.\u201d\u200b<\/p>\n

Crypto Shift: Shut Out to Backbone <\/strong><\/h2>\n

Once treated with suspicion and shut out of traditional banking, the crypto industry was forced to build its own infrastructure\u2014wallets, stablecoins, exchanges, and even banking alternatives. Now, it’s helping solve the very problems it once faced. Platforms like BitPay<\/u><\/a>, Flexa<\/u><\/a>, and NOWPayments<\/u><\/a> let merchants accept crypto and receive dollars\u2014bypassing the traditional rails that have excluded them. For cannabis businesses, these systems processed over $3.5 billion in 2023\u201412% of the sector’s total volume<\/u><\/a>, up from just 4% two years earlier. Still, adoption remains slow. Most cannabis customers aren\u2019t crypto-native, and onboarding them\u2014wallets, tokens, private keys\u2014adds friction. Until crypto becomes more seamless for average consumers, it risks remaining a workaround rather than a real alternative.<\/p>\n

Not all solutions come from traditional fintech. Some crypto-native platforms are carving out roles in this space. LBank<\/u><\/a>, a rising player in the digital asset economy, is building infrastructure to support global crypto adoption\u2014serving users across sectors while also providing solutions for underbanked industries. By listing memecoins that serve as cultural and financial entry points, LBank makes crypto more approachable. “We’re committed to bridging the financial divide,” said Eric He, LBank’s Community Angel Officer. \u201cOur goal is to empower users with accessible digital assets and tools that drive inclusion and growth.\u201d<\/p>\n

Demand is especially rising for stablecoins<\/u><\/a> like USDC<\/u><\/a>. Dollar-pegged and programmable stablecoins offer the speed and compliance advantages of blockchain without the volatility of traditional crypto assets\u2014making them a practical option for high-risk industries navigating complex compliance terrain.<\/p>\n

Yet the stigma hasn\u2019t fully lifted. A 2024 survey by the Alternative Investment Management Association (AIMA)<\/u><\/a> found that 75% of crypto hedge funds still face banking hurdles. Even regulated players face scrutiny. Anchorage Digital<\/u><\/a>\u2014the only federally chartered crypto bank\u2014is under investigation for alleged anti-money-laundering lapses, showing that even the most compliant firms aren’t immune.\u200b<\/p>\n

But crypto isn’t just surviving exclusion\u2014it’s laying new rails. And for industries boxed out of traditional finance, those rails may soon become essential infrastructure.<\/p>\n

Signs of Change<\/strong><\/h2>\n

As one regulator privately put it, \u201cWe\u2019ve moved from asking whether these industries should be banked to figuring out how to bank them responsibly.\u201d<\/p>\n

The SAFER Banking Act<\/u><\/a> has cleared the House seven times since 2019\u2014most recently with a 321\u2013101 vote\u2014but it still faces hurdles in the Senate, where it currently has 42 co-sponsors. If enacted, the bill would protect banks from federal penalties for serving state-regulated cannabis businesses.<\/p>\n

Meanwhile, new efforts are gaining traction. The Office of the Comptroller of the Currency<\/u><\/a> (OCC) has proposed a Financial Innovation Office to evaluate products aimed at underbanked sectors. California<\/u><\/a> has launched a \u201cresponsible innovation\u201d office, and the Financial Crimes Enforcement Network<\/u><\/a> (FinCEN) has endorsed the use of AI-driven tools to streamline compliance for high-risk industries.<\/p>\n

From Bottleneck to Blueprint<\/strong><\/h2>\n

This $100 billion bottleneck is the result of unresolved legal contradictions and the heavy regulatory burdens they\u2019ve created. Federal law still criminalizes what many states have already legalized. Fintechs, crypto rails, and compliant regional banks aren\u2019t just patching a broken system\u2014they\u2019re building a new one. With programmable compliance, digital-native infrastructure, and a bias toward inclusion, they\u2019re unlocking financial access where the legacy system shut the door.<\/p>\n

They\u2019re not waiting for permission. They\u2019re building what comes next\u2014and for the millions still shut out, that future can\u2019t arrive soon enough.<\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Fintech (financial technology) getty Fintech stepping in where traditional banks have stepped out In early 2023, the CEO of a thriving CBD company in Colorado opened their laptop to a gut punch: their bank had shut down the company\u2019s account. No warning. No appeals. Just a dead end\u2014and a scramble to meet payroll, pay vendors,<\/p>\n","protected":false},"author":1,"featured_media":13938,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[237,94,5768],"class_list":{"0":"post-13937","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-billion","9":"tag-market","10":"tag-underserved"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/13937","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13937"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/13937\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/13938"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13937"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13937"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13937"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}