Record Number of Banks Work with Marijuana Businesses as Rescheduling Looms, New Data Shows
A record number of banks and credit unions are now reporting their involvement with state-legal marijuana businesses, according to new federal data. The Financial Crimes Enforcement Network (FinCEN) has been tracking cannabis banking trends for over a decade, and its latest report shows a significant increase in the number of financial institutions working with marijuana companies.
The report, which covers the second quarter of 2024, reveals that 831 banks and credit unions are actively involved with marijuana businesses, up from 815 in the previous quarter and 799 in the quarter before that. This marks a new high in the number of financial institutions working with the cannabis industry.
The increase in banks working with marijuana businesses may be attributed to several factors, including the expansion of state marijuana markets and the growing pressure on Congress to enact broader protections for financial institutions interested in servicing the cannabis industry. The Biden administration’s proposal to reschedule marijuana from a Schedule I to a Schedule III controlled substance could also play a role in the increased willingness of banks to work with marijuana businesses.
FinCEN’s data also provides insights into the types of suspicious activity reports (SARs) filed by financial institutions in relation to marijuana businesses. The agency’s spreadsheets now look back retroactively over a 10-year period, dating back to the initial issuance of cannabis banking guidance in 2014.
State-by-state breakdowns of the data reveal significant disparities in the number of SARs filed by financial institutions in different markets. California led the pack with 4,073 SARs filed, followed by Oklahoma with 2,562 SARs. Colorado, the first state to enact adult-use legalization, had a relatively lower number of SARs filed, with 864 reports.
Despite the growing number of banks working with marijuana businesses, there is still significant reluctance within the banking sector to fully embrace the industry. The Secure and Fair Enforcement Regulation (SAFER) Banking Act, which cleared a Senate committee last year, is still pending floor action and faces an uncertain future.
The Congressional Budget Office (CBO) recently released an analysis on the economic impact of the reform, including the likely increase in federally insured deposits from cannabis businesses by billions of dollars once banks receive protections for servicing the industry. The CBO also scored an earlier version of the marijuana banking bill, finding that the federal government would ultimately save money if the reform was enacted.
