Bridging The Gap Between Financial Institutions And Cannabis Industry With Credit Scores
Credit scores might help add density to the somewhat depleted financial landscape of the cannabis industry, which has long struggled with access to traditional financial services as banks remain hesitant to offer loans, lines of credit or other support.
With the launch of CTrust’s Cannabis Trust Score (CTS), the industry is presented with a solution designed to help address these challenges and add to the cannabis financial market maturity. In this exclusive interview, we dive into the matter with CTrust’s founder Dotan Y. Melech.
The Need For Banking Solutions In Cannabis
Due to federal prohibition, financial institutions have found it difficult to serve cannabis-related businesses (CRBs), even in states where cannabis is legal. In this context, risk assessment tools might help banks and lenders evaluate the financial health of cannabis companies. At the same time, these instruments might be of assistance to financially healthy cannabis companies in need of gathering capital.
Melech emphasizes the magnitude of what we can call a transparency problem, that translates in reluctancy from financial institutions to build instruments for the cannabis industry.
“We have seen a serious gap between the needs of cannabis businesses and the willingness of financial institutions to engage with them,” Melech said. “This isn’t just a regulatory issue—it’s about financial security and growth. Cannabis businesses need access to the same services that other industries take for granted, such as loans and credit lines.”
The point being that adding instruments may help reduce the reluctance of lenders that have punished good cannabis business.
“Banks simply don’t have the tools to assess the …