By Tony Repanich
The Midwest’s cannabis industry is on a growth trajectory, with Ohio and Michigan leading the way. Since launching adult-use sales in August 2024, Ohio has surpassed $700 million in sales within the first year. Including medical marijuana, total sales could top $1 billion in 2025. Michigan’s market, already one of the largest in the nation, continues its upward trajectory. While growth has been somewhat flat in Illinois, it has maintained a relatively stable pricing environment compared to other states. In Minnesota, five retailers were granted final approval to begin selling cannabis, the first such businesses not operated by one of the state’s 11 tribal nations. By the end of the year Minnesota could see up to 150 cannabis businesses not owned by the tribes, according to the Office of Cannabis Management.
But growth in the Midwest comes with its share of challenges – some expected, some intensified. From declining margins and increased competition to rising compliance demands and limited access to capital, the challenges are real. Yet despite these pressures, a resilient core of operators continues to push forward. For financial institutions serving or considering serving the cannabis industry, this resilience creates both opportunity and responsibility.
Over the past year, the industry has seen consolidation, tighter margins, and even business closures, and those trends haven’t slowed. The outlook for federal cannabis reform remains murky at best, despite recent statements from new leadership at the DEA. That uncertainty means operators and their financial partners must keep managing risk and optimizing what they can control.
One of the biggest issues looming for cannabis businesses is debt refinancing. With many loans maturing over the next year, the question becomes whether banks will step up or if licensed operators will have to look elsewhere for capital.
Combined with rising prices, tariffs, and other cost pressures, these financial headwinds are driving tough decisions. Many companies are exiting underperforming markets and focusing only on high-return assets. It’s a necessary rationalization in what has become a more disciplined, profitability-driven era.
That’s the silver lining. The operators who survive this period will have better management teams and will be more well capitalized, more efficient, and focused on sustainable growth. We’ve moved beyond the early days of irrational exuberance, when just having a license was a golden ticket. Today, being in the cannabis business isn’t about hype; it’s about execution.
The banking landscape has evolved, too. Cannabis businesses today have far more options than they did just a few years ago. In most legal states, operators can now choose between multiple financial institutions. And while they may not always love the fees or compliance requirements, access is no longer the barrier it once was.
We’re seeing two main approaches among cannabis bankers. Some are building high-capacity, multi-state programs that can scale alongside the industry’s best operators. Others are focused on smaller, relationship-driven portfolios within their local markets. Both models can succeed, but they require clear value propositions. Simply offering cannabis banking is no longer enough.
For banks entering this space now, the bar is higher. The risk framework is well-defined, but the competition is real. Pricing must be competitive. Compliance requirements must be thoughtful and aligned with what truly matters from a BSA/AML perspective. And the overall program must generate value because regulatory uncertainty and compliance costs still exist.
With the right technology and processes in place, bankers are putting data and automation to work to deliver that value to customers. Specialized compliance technologies can help reduce the costs associated with serving this line of business while improving efficiency and enabling scale. Reducing time spent on rote compliance allows cannabis 
banking teams to focus their time and energy on building strong customer relationships, critical thinking, and judgmental decision-making. Having a better line of sight into their customers’ business activities enables banks to better meet current needs while proactively anticipating future requirements, such as access to credit.
The cannabis market is not without its challenges, but there is a promising future for operators and financial institutions that focus on sound fundamentals, strong partnerships, and compliance excellence.
About the Author
Tony Repanich is the president and CEO of Shield Compliance, a compliance platform provider for cannabis banking. Shield has partnered with more than 75 financial institutions serving licensed cannabis operators and monitored more than 20 million transactions, including $75 billion in deposit volume. Please contact us to learn how the economics of cannabis banking can support the growth of your financial institution.