Federal Agency Reports Stable Trend in Banks Working with Marijuana Businesses Despite Federal Prohibition
The Financial Crimes Enforcement Network (FinCEN), a division of the US Department of Treasury, has released updated data on the number of banks reporting their interactions with marijuana businesses. The data shows that most financial institutions are willing to work with cannabis clients, despite federal prohibition.
According to the latest figures, 80% of suspicious activity reports (SARs) related to marijuana businesses are categorized as “marijuana limited,” indicating that the financial institutions are working with cannabis companies that appear to be operating in compliance with state law. This is a stable trend, with the number of banks and credit unions serving cannabis businesses remaining relatively consistent over the past few years.
The data also shows that there are significant disparities in the number of SARs filed by financial institutions in different states. California led the pack with 3,812 SARs, followed by Oklahoma with 2,735 SARs. Colorado, the first state to legalize adult-use cannabis, had a relatively lower number of SARs, with 735 reports filed.
Despite the stability in the number of banks working with marijuana businesses, there is still significant reluctance within the banking sector to engage with the industry. This is reflected in the relatively low number of depository institutions that follow FinCEN’s guidance and take on cannabis clients.
The industry is holding out hope that a pending proposal to reschedule cannabis as a Schedule III drug could make banks more willing to engage with the sector. This would allow marijuana businesses to take federal tax deductions, which they are currently barred from under the Internal Revenue Service code.
There are also ongoing efforts in Congress to pass legislation protecting banks that work with state-licensed marijuana businesses. A bipartisan coalition of 32 state and territory attorneys general has called on Congress to pass a marijuana banking bill, and a Democratic Senate sponsor of the bill has expressed hope that it will be taken up sooner rather than later.
Overall, the data suggests that while there are still challenges facing the marijuana industry, the trend towards increased acceptance and normalization of cannabis is continuing.
