New data from the Financial Crimes Enforcement Network (FinCEN) has revealed that a growing number of financial and credit institutions are working with businesses in the cannabis sector. America’s state-legal cannabis industry has had limited access to banking and financial services for most of its existence because marijuana is still classified as a Schedule I product at the federal level.
Unable to access bank accounts or use cashless payment services, cannabis businesses across the country had no choice but to operate on a cash-only basis, which significantly increased their risk of violent robberies. However, after industry players and lawmakers spent years calling for cannabis banking legislation, U.S. senators are now poised to advance a marijuana banking bill that would finally grant the industry access to banking services.
However, even though cannabis banking legislation still hasn’t advanced yet and the plant is still illegal at the federal level, FinCEN’s quarterly report shows a significant increase in the number of financial institutions choosing to serve businesses in the cannabis sector. FinCEN reports that 812 credit unions and banks were actively serving cannabis businesses in Q2 2023, the highest number ever recorded since FinCEN started reporting in 2014.
One reason for the uptick in banking institutions and credit unions choosing to serve cannabis businesses may be due to the fact that several more states legalized recreational cannabis since FinCEN’s last report on the matter. Recent bipartisan discussions regarding cannabis banking reform may also have made financial institutions more comfortable with the idea of serving cannabis businesses as clients.
The Senate Banking Committee is set to vote on the Secure and Fair Enforcement (SAFE) Banking Act next week, and committee chair Sherrod Brown included the marijuana banking bill in a group of priority bills he is looking to advance within the next six weeks.
If signed into law, the SAFE Banking Act would protect banks, depository institutions, and credit unions that work with licensed cannabis businesses from federal penalties. The measure currently has 42 cosponsors, including eight Republicans and three Independents, but has been held back by intense debate over specific sections of the bill.
FinCEN based its report on data collected from Suspicious Activity Reports (SARS) filed by financial institutions working with businesses in the state-legal cannabis sector. The report found that financial institutions in California filed 3,757 SARS in Q2 2022 followed by Oklahoma with 2,531 SAR filings, Colorado with 951 filings and Oregon with 436.
It is likely that major cannabis industry players such as Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) are looking forward to a time when federal banking rules will be changed to permit marijuana companies to be regarded as any other licensed business whose activities don’t have to be reported in SARS reports.
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