Navigating The Legal Landscape Of Cannabis Banking

Robbers in movies typically leave behind bags of cash marked with an indelible ink signature; state-legalized marijuana-related businesses typically only possess cash as means of transaction.

Cannabis companies with revenue that must be stored in cash have an extreme difficulty accessing banking services, leaving their revenue vulnerable to criminality. But could the SAFER Banking Act change that?


Federal legislation was recently proposed that would help marijuana-related businesses access banking services they require. Known as the Secure and Fair Enforcement Regulation Banking Act (SAFER), this bill could alter how banks, credit unions, insurers and other financial institutions do business with cannabis-related businesses.

If it were to pass, this bill would prevent the Treasury Department’s Financial Crimes Enforcement Network from discouraging or prohibiting depository institutions from providing banking services to cannabis-related businesses and codify FinCEN guidance on “BSA Expectations Regarding Marijuana-Related Businesses.” However, although exempted by law from certain requirements that otherwise apply in other highly regulated industries (like know your customer standards and ongoing suspicious activity monitoring), certain requirements remain that remain for these institutions as part of this bill.

MRBs seeking bank accounts should prepare an exhaustive set of documentation that they can share with potential banks, and form close ties with their banker in order to avoid any red flags that may trigger a BSA review or forfeiture action by the federal government.

FinCEN Guidelines

New York state-chartered banks and federally chartered and supervised credit unions may bank state-licensed cannabis and marijuana-related businesses if they implement an appropriate policy and technology to manage BSA compliance and risk effectively, including making sure customer accounts do not tie to CRBs, conducting risk-based customer due diligence procedures, and monitoring transactions that align with each institution/entity’s business plan, risks, and management capabilities.

As the SAFE Banking Act progresses through Congress, financial institutions will have an opportunity to improve their cannabis-related policies and conduct an in-depth risk evaluation of these accounts. This evaluation should identify activities with lower risks versus those with greater risks; ensure compliance with Cole Memo enforcement priorities or any rescinded Guidance regulations; identify red flags; review documentation and carry out ongoing transaction monitoring as a part of ongoing transaction monitoring – ultimately the cannabis industry cannot flourish without access to safe banking.

Risk Assessment

Due to federal prohibition against marijuana, banks and financial institutions that work with cannabis businesses face a higher risk of money laundering (a federal crime) than when working with other industries. This is because transactions conducted by marijuana businesses involve large sums of cash which may pass for legitimate business activity when reviewed by anti-money laundering experts.

As such, many financial institutions remain cautious of working with cannabis companies or at best limit their relationships to deposit-only services. But as stigmatization recedes and state legalization increases, more banks are creating programs tailored specifically towards this industry.

As part of their risk analysis when working with MRBs, potential institutions should assess state legality as well as reputational risks associated with being known as “weed banks.” BSA officers should review any prior SAR filings related to MRBs that have occurred and assess the likelihood of additional filings in the future.


As state-level legalization spreads, financial industries cannot overlook this lucrative market sector. Unfortunately, federal law still stands as an impediment to safe banking for cannabis companies; though DOJ rescinded their Cole Memo, FinCEN guidelines remain effective ‘know your customer’ directives that limit banking options available.

There are currently legislative efforts afoot that could facilitate reform. The SAFE Banking Act seeks to shield banks, credit unions, lenders and other financial institutions from any legal repercussions when engaging with state-legal marijuana businesses or providers; additionally, this bill extends beyond FinCEN guidelines by covering payment processing services, mortgage lending agreements and insurance (in addition to deposit accounts).

Even with these obstacles in place, many community banks remain willing to provide MRBs with banking services if approached correctly. Clear communication with clients will ensure they understand what’s expected of them – this approach should prevent them from getting bogged down with banking jargon or legalese and could ultimately make more likely sign on as clients.


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