Half Banked: The Economic Impact of Cash Management in the Marijuana Industry

70 Pages Posted: 11 Dec 2020 Last revised: 3 Jun 2021

See all articles by Elizabeth Berger

Elizabeth Berger

University of Houston; Cornell University

Nathan Seegert

University of Utah - Department of Finance

Date Written: May 7, 2021

Abstract

We investigate the economic consequences of access to banking institutions. To do so, we examine the legal marijuana industry, where only half of businesses have access to cash management services from a financial institution. We quantify the benefits of cash management in terms of differences in wholesale prices, retail prices, sales, and ultimately profitability using administrative and survey data. Firms with cash management receive a 10\% discount on wholesale prices, charge 10\% higher retail prices, and sell more product per transaction for the same product. Through these channels, we find that banking services provide a large economic value to firms.

Keywords: Banking, Supply Chain, Cash Management, Marijuana, Access to Finance

JEL Classification: G21, O16, L11, G51

Suggested Citation

Berger, Elizabeth and Seegert, Nathan, Half Banked: The Economic Impact of Cash Management in the Marijuana Industry (May 7, 2021). Available at SSRN: https://ssrn.com/abstract=3718455 or http://dx.doi.org/10.2139/ssrn.3718455

Elizabeth Berger (Contact Author)

University of Houston ( email )

Houston, TX 77204
United States

Cornell University ( email )

Ithaca, NY 14853
United States

Nathan Seegert

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

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