The Financial Crimes Enforcement Network ("FinCEN") found that more banks and credit unions have been accepting cannabis businesses since 2018. According to the Frequently Requested FOIA-Processed Records, FinCEN reported that by March 2019 there were 493 banks and 140 credit unions handling cannabis businesses. By comparison, 438 banks and 113 credit unions were engaged with such businesses as of December 2018.

The report also noted that, as of March 31, 2019, FinCEN had received 81,725 Suspicious Activity Reports ("SARs") concerning marijuana-related businesses. In 2014, FinCEN issued guidance stating that financial institutions involved in the cannabis industry must file SARs to prevent illegal activity such as fraud and money laundering. SARs allow the government to know which banks are providing banking services to the cannabis industry and who owns the cannabis businesses, and alert the government to any suspicious activity. FinCEN requires financial institutions serving cannabis businesses to file one of three types of SARs:

  • A "Marijuana Limited" filing should be completed when a financial institution's due diligence causes the institution to reasonably believe that the marijuana-related business does not raise any of the red flags cited in the Cole Memo and is compliant with the appropriate state's regulations regarding marijuana businesses.
  • A "Marijuana Priority" filing should be completed when due diligence causes the institution to reasonably believe that the marijuana-related business may raise one of the Cole Memo red flags or may not be compliant with the appropriate state laws.
  • A "Marijuana Termination" filing should be completed when a financial institution's due diligence indicates that it is necessary to terminate the relationship with a marijuana-related business in order to maintain an effective anti-money laundering compliance program.

Commentary / Jordan Thompson

The steady increase in financial institutions serving cannabis businesses mirrors the growing support for federal banking reform to aid the cannabis industry. Despite there being no set safe harbors for banks that serve cannabis businesses, these data show that an increasing number of financial institutions recognize the regulatory risks but feel confident that their compliance programs, or legislation on the horizon, will shield them from any money laundering issues. The number of SARs filed also could be a testament to the commitment to compliance by the banks serving the cannabis industry. Nevertheless, even after the positive revelations in the FinCEN report, and the promising support of safe harbor legislation, such as the SAFE Banking Act or the STATES Act, many financial service providers remain reluctant to engage with state-licensed cannabis businesses. This leaves many state-legitimate cannabis businesses without access to needed financial services.

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