Cannabis Banking
What’s the Issue?
Although almost all states now permit some form of legal cannabis commerce – medical, recreational or both – the federal government still classifies cannabis as a Schedule 1 drug under the Controlled Substances Act. Banks must abide by both state and federal law.
Given the challenges associated with providing financial services to state-authorized cannabis businesses, many state-licensed cannabis-related businesses transact in cash outside the regulated financial system. Offering banking services to state-authorized cannabis-related businesses, as well as the businesses that serve them carries important legal and regulatory risks to banks. Even financial institutions that do not bank cannabis customers directly increasingly find themselves caught in the financial web created by indirect connections to this booming business. As cannabis has grown into an estimated $45 billion industry, it will soon be almost impossible to avoid banking all businesses directly or indirectly related to state-licensed cannabis producers and providers.
How Does That Impact Me?
No matter where you stand on the broader issue of cannabis legalization, businesses cannot operate safely or transparently without access to banks. High volume, cash-only businesses are targets for crime and create a public safety risk that needs immediate attention. Banks play an important role identifying and reporting on suspicious activity, and screening for illicit finance risk. Our communities would be safer, and the cannabis industry would be better regulated if cannabis businesses were able to access the banking system.
What Can Be Done?
Because it’s a federal issue, Congress has an opportunity to do something about it.
Congress should allow state-licensed cannabis businesses to participate in the banking system and remove the risk that banks and other financial services providers will face legal liability, or regulatory, civil, or even criminal penalties just for providing services to legitimate state cannabis businesses and their service providers.
Congress should support and pass legislation like the Secure and Fair Enforcement Regulation (SAFER) Banking Act, which previously passed the Senate Banking Committee with bipartisan support, or the SAFE Banking Act and allow banks to serve otherwise law-abiding cannabis-related businesses in states where the activity is legal.
Learn more in-depth about cannabis banking here.