US Treasury Reports More Banks Acknowledge Relationships With Weed Businesses

Even with the banking ban, transparency among financial services firms that work with legal cannabis businesses prevail within the industry. According to data provided by the U.S. Treasury Department, over 800 banks and credit unions have filed paperwork with the U.S. government acknowledging their relationships with licensed cannabis businesses.

This figure is a leap from a year ago in which the agency identified 553 banks (about 11 percent of all U.S. banks) and 202 credit unions (about 4 percent of all U.S. credit unions) that were providing banking services to marijuana-related businesses.

The banking ban is one of the industry’s most formidable challenges. Even if cannabis businesses operate in legal states, financial institutions will not work with them due to the federal illegality. As a result, many businesses are forced to become cash-only operations, rendering them vulnerable to theft and other criminal acts. Although some businesses find refuge with credit unions while others deposit cash in a safe or contract a cash holding company, traditional banks are still the optimal solution to an issue that continues to plague the industry.

With two thirds of the country allowing legal cannabis markets and more than a third permitting recreational use, banking, government and industry representatives have been clamoring for years to remedy this catch-22 situation. Several years ago, the SAFE Banking Act, a bipartisan legislation that would prevent federal banking regulators from sanctioning banks for working with legal cannabis businesses, was introduced in Congress. Unfortunately, the bill hit a stalemate in the Senate after being approved by the House of Representatives with wide margins and significant bipartisan support. Last April, it was reintroduced in Congress. And, next week, members of the Senate Banking Committee are scheduled to hold a “mark-up” on a newly introduced version of this renamed legislation, the Secure and Fair Enforcement Regulation (SAFER) Banking Act.

According to a survey conducted last year by Whitney Economics, over 70 percent of participating cannabis businesses say that the “lack of access to banking or investment capital” is their top challenge. This is in contrast to only 42 percent of respondents citing “state regulations” as the most significant burden facing the industry, with 39 percent invoking the “influence of the illicit market.”