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Wall Street is reevaluating its stance on testing new hires for marijuana use.
- Sixty-five percent of adults in the US support legalizing marijuana at the federal level, according to recent polls.
- Amid the rapidly changing social climate, Wall Street banks are reevaluating their policies on testing new hires for marijuana use.
- Marijuana is becoming a multi-billion industry in the US, and it's clear that banks want a piece of it.
Attitudes around marijuana use are changing rapidly in the US, and the largest banks are no exception.
A recent CBS News poll shows that 65% of adults in the US support legalizing marijuana at the federal level, including 56% of Republicans. To put that in perspective, only 45% of adults responded that marijuana should be legalized when CBS asked the same question in 2013.
Given the public shift on marijuana, it's natural that some of the country's largest and most prestigious employers are reevaluating their policy on testing job applicants and recent hires for a substance that is now legal for recreational consumption in ten states and Canada. Business Insider previously reported that Citigroup is reevaluating its drug testing policy in light of the changing social climate around marijuana use.
New York City Council passed a bill in April that bars employers in the city from forcing job applicants - outside "safety-sensitive" industries like law enforcement and construction - to take drug tests for marijuana use. Many of the largest banks are either headquartered or at least have large presences in New York, meaning that this shift will likely affect them. The law goes into effect in May of next year.
Eric Ruden, an employment expert at the law firm Duane Morris's New York office, told Business Insider that in his view, many banks will have to update their policies to comply with the new rule.
There is a caveat, however, as Ruden pointed out. The rule only prevents banks from drug testing new job applicants - not existing employees. "[S]o if an employer drug tests for marijuana as a condition of a promotion, the employer is not required to change its policy," said Ruden.
"With expanded illicit use of marijuana and the possibility of legalization for recreational use in the future, New York City employers should consider whether it makes sense to test for marijuana going forward," said Ruden.
Legal marijuana is also set to be a gigantic market for investment banks who make lots of money advising on M&A and public offerings, especially as the cannabis industry enters a wave of consolidation as scrappy startups turn into public companies with multi-billion valuations, all jockeying for market share.
Though momentum for legal marijuana has slowed in New York - Albany failed to pass a bill legalizing the drug this year - many of the biggest investment banks are slowly dipping their toes in the water by advising existing clients on how to find the upside of the marijuana legalization wave. They're getting acquainted with a brand-new industry that some Wall Street analysts say will become a $194 billion global industry by 2030. CBD alone is predicted to be a $16 billion industry by 2025.
Still, there are numerous roadblocks to doing business in the cannabis industry, namely that it's still considered an illegal, Schedule I drug by the US federal government.
That's put banks in an awkward position, where they risk getting prosecuted under federal money laundering laws for working with companies that cultivate or distribute THC-containing products in the US. Some smaller banks, however, have pushed in to fill the gap as the largest banks have been unwilling to take the risk.
Business Insider asked six of the largest banks about their policies on testing job applicants and recent hires for marijuana use. If you're on the job hunt, you'll want to read on.
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