A federal agency released new data as Senators prepare to vote on a marijuana banking bill next week. The data shows that an unprecedented number of banks and credit cooperatives now work with the cannabis industry.
FinCEN, the Financial Crimes Enforcement Network, has been tracking cannabis bank trends for more than a decade. Its latest quarterly report shows that the number of banks willing to provide services to state-legal marijuana companies despite federal prohibition is increasing.
In the second quarter 2023, 812 banks and credit cooperatives actively worked with marijuana companies. This is a record since FinCEN began tracking this data in 2014. This is up from 807 during the first quarter, and 773 the previous quarter.
FinCEN compiles these data on the basis of financial institutions that have filed “Suspicious Activities Reports” (SARs) for clients who are involved in marijuana-related businesses.
FinCEN updated its report on the cannabis industry in May 2017. Since then, several factors have contributed to the rise of banks that work with cannabis businesses.
A second possibility is that banks will be more willing to accept cannabis clients, given the fact that both partisan and non-partisan members of Congress are working together to pass the Secure and Fair Enforcement Banking Act. The Senate Banking Committee scheduled a vote next week on the cannabis legislation.
FinCEN has adopted a more detailed approach in its cannabis banking reporting , since last year. This provides insights into the types of SARs that it has received from different states. The spreadsheets of the agency now go back nine years, starting with the first cannabis banking guidance issued in 2014 under the Obama administration.
The data shows that there are wide differences between the financial institutions’ reports of marijuana related transactions in different states.
California, for example, led the pack in terms of banks and credit unions submitting 3,757 SARs during the quarter ending June 20,23. Oklahoma, with its medical cannabis system, which has allowed for a proliferation of dispensaries to flourish, was second, with 2,531.
Colorado, which was the first to legalize adult use, had a lower number of reports, 951. Oregon had 436 SARs.
There are also other anomalies, such as Kansas. This state has no access to cannabis that is regulated but 282 SARs have been filed. Texas’s medical cannabis program is restricted and low-THC, yet 739 reports were filed.
The numbers do not reflect the number or cannabis businesses in a state. One bank may have filed multiple reports, and some SARs note the termination of service. FinCEN’s guidance may be interpreted differently by different financial institutions, and they might also have a different interpretation of when to report marijuana industry clients.
FinCEN provided guidance to the financial sector in 2014, which was meant to assist banks as they navigate the cannabis market while the plant is still federally illegal. Advocates, stakeholders and legislators from both sides of the aisle agree that more must be done to normalize this sector and give banks certain assurances.
The banking industry is still hesitant to work with cannabis-related businesses. This is reflected by the low number of institutions that follow guidance and accept cannabis clients.
FinCEN’s quarterly reports have not included the hemp explanation language in previous reports. This could be a reason for the data drop.
According to the federal agency, as of the end June 2023 there were 496 credit unions and 496 banks reporting active marijuana customers. There were 139 non-depository institutions that also filed cannabis SARs.
While the Senate Banking Committee will be marking up the SAFE Banking Act by the end of September this year, Treasury Secretary Janet Yellen informed lawmakers in March that regulatory agencies are also looking at options to deal with the unique financial challenges associated with the cannabis industry.
Yellen stated last year that it is “extremely disappointing” that Congress so far has not been able to pass legislation such as the SAFE Banking Act and that Treasury “supports” the proposal.
FDA and other federal agencies discuss marijuana research barriers, state legalization models, and CBD regulations at National Academies meeting
The post New federal data shows record number of banks working with marijuana businesses as Senate schedules vote on reform bill appeared initially on Marijuana Moment.
