The number of banks that are willing to work with marijuana businesses is steadily climbing, even after the Department of Justice revoked protections for state cannabis laws, new federal data shows.
By the end of March, 411 banks and credit unions in the U.S. were “actively” operating accounts for marijuana businesses, according to a report from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). That’s up more than 20% from when President Trump took office early last year.
While the number of financial institutions servicing cannabis growers, processors, retailers and related businesses dipped slightly in the two months immediately following U.S. Attorney General Jeff Sessions’s decision this January to revoke Obama-era Justice Department guidance protecting state marijuana laws, the total has since started to climb again.
A growing number of states are moving to allow cannabis for recreational or medical use, but federal prohibition remains unchanged, for now. As a result, banks that accept marijuana industry money run the risk of running afoul of U.S. money laundering and other laws.
Because of financial services providers’ reluctance to work with marijuana businesses, many are forced to operate on a cash-only basis, which makes them targets for robberies.
On Wednesday, a key congressional committee voted to defeat an amendment that would have protected banks that work with marijuana businesses from Treasury Department sanctions. If that measure were enacted into law, even more financial institutions would likely feel safer working with the cannabis industry.
The new data, covering the last quarter of 2017 and the first quarter of this year, was uploaded to FinCEN’s website last month and represents the two most recent releases in a set of periodic updates on marijuana banking. Earlier data released late last year also showed an increase in the number of financial institutions working with cannabis businesses.
In addition to providing new cannabis banking stats through March 31, the latest document has new language appearing to address the uncertainty caused by Sessions’s move to revoke previous Justice Department guidance on marijuana enforcement.
A related Treasury Department memo on banking has not yet been rescinded, although Trump administration officials have said that they are reviewing it.
“The SAR reporting structure laid out in the 2014 guidance remains in place,” the new update says, referring to suspicious activity reports that banks working with marijuana businesses must file. “FinCEN will continue to work closely with law enforcement and the financial sector to combat illicit finance, and we will notify the financial sector of any changes to FinCEN’s SAR reporting expectations.”
In 2014, under the Obama administration, FinCEN issued guidance to banks about how to serve the marijuana industry without running afoul of federal regulators. The memo, which requires financial services providers to regularly file reports on customers with cannabis accounts, was meant to provide clarity and assurances to banks. But many have remained reluctant to work with marijuana businesses because ongoing federal cannabis prohibition could trigger money laundering laws and other risks.
On Wednesday, Federal Reserve Chairman Jerome Powell said that the current gap between federal and state marijuana laws “puts federally chartered banks in a very difficult situation.”
“It would great if that could be clarified,” he said. “Our mandate has nothing to do with marijuana, so we just would love to see it clarified.”
Treasury Sec. Steven Mnuchin, has suggested in several appearances before congressional committees that he would like to see marijuana businesses be able to access banking services.
“I assure you that we don’t want bags of cash,” he said before a House committee this year. “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.”
In separate Capitol Hill testimony, he said that solving cannabis businesses’ financial services problems is at the “top of the list” of his concerns.
Pending legislation to change federal laws on banking for marijuana businesses has record support in Congress. A House bill authored by Rep. Ed Perlmutter (D-CO) has 94 cosponsors, while companion Senate legislation from by Sen. Jeff Merkley (D-OR) has 18 senators signed on.