Crypto isn’t the only edgy new industry being roiled by the collapse of several banks.

US companies that deal directly with cannabis, a federally illegal substance, are already shut out of large banks. So these companies have increasingly found support in an estimated 200 to 700 smaller financial firms that serve them, including state-chartered banks.

These are precisely the financial institutions that are at risk amid the turmoil that’s battered Signature Bank, Silicon Valley Bank, First Republic Bank and others. This could turn into a problem for their client cannabis companies that have extremely limited options to go elsewhere.

“A lot of the industry is with mid-tier banks,” said Morgan Paxhia, co-founder of one of the longest-running cannabis investment funds, Poseidon Investment Management. “The concern is those banks have a lot of default risk on the horizon because of their commercial loan books.”

The $150 million fund has already seen four or five of its 35 to 40 portfolio companies affected — one with SVB and most with Signature Bank, which was closed March 12. So far, all are still able to pay workers and continue operations. But if more banks fail, cannabis companies may have more trouble than other banking clients in finding new institutions to work with, Paxhia said. [Read More @ Bloomberg]