Cannabis brands have been longing for access to banking since California began decriminalization in the 1990s, but few banks have been willing to take them on as customers. Access to basic banking services — like checking accounts, merchant accounts, and business loans — has been limited due to the restrictions that federal authorities continue to uphold.
Even federal prohibition, however, can’t stop financial institutions from taking notice of a new, blooming industry that is struggling with cash management, and they want to be part of the solution. Despite the U.S. Attorney General’s Office now holding a less-favorable position on state legalization than it did a few years ago, the number of banks and credit unions willing to work with marijuana businesses continues to rise, according to a report from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
FinCEN reports that, as of March 2018, 411 banks/credit unions are now actively banking cannabis businesses in the United States. Compare that to October 2016, where only 318 institutions were actively banking cannabis, and you’ll see the trend is growing.
While the current federal administration has not been favorable to cannabis so far, that hasn’t stopped interest from growing in 2017. From January to June 2017, the number of financial institutions working with cannabis businesses went up 15.5%. In July 2017, when a letter from U.S. Attorney General Jeff Sessions to Washington officials was published that indicated he intended to crackdown on cannabis, the total number of banks serving cannabis dipped by 4.1%.
That may sound disheartening, but by August 2017, even more banks and credit unions had started actively banking marijuana businesses than before the Sessions’ letter was published. Banks are federally chartered institutions, so it’s understandable that some have remained reluctant to work with cannabis. Not everyone in Washington D.C. is against cannabis. Some federal officials have been advocating for cannabis banking, such as Treasury Secretary Steven Mnuchin.
In February 2018, Mnuchin told the House Financial Services Committee, “I assure you that we don’t want bags of cash. We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe.”
Several bills have been proposed to bring banking to cannabis businesses officially — including the House’s bill the SAFE Act and the Senate’s bill the SAFE Banking Act — but these bills and others like them haven’t made it through their committees to be voted on or moved through the process. But there is a willingness in Washington D.C. to reduce the cash burden of cannabis businesses. With a clearly anti-cannabis U.S. Attorney General, state lawmakers have been fighting with renewed energy to protect the rights of states that have decriminalized or legalized adult-use or medicinal cannabis.
Even as that battle continues in the federal arena, more banks and credit unions continue to open their doors to cannabis businesses, and that’s good news for those in this currently cash-heavy industry.