The History of Cannabis and Banking

The total number of active banking institutions that are intentionally servicing accounts for marijuana businesses has grown by around 20% since 2017 according to federal data on transaction monitoring.

The new data comes as marijuana legislative reform continues its political trial. Last year, Michigan voters approved recreational marijuana legalization and those in Missouri and Utah passed medical cannabis measures.

With even more interest generated by the public in exploring state led initiatives, many policy makers are looking to Washington to clarify the stance of the federal government in dealing with state-legal businesses handling cash from cannabis based revenue streams.

In 2014, under the Obama administration, FinCEN issued guidance to banks about how to deal with the risk prone cannabis industry without running into problems from the IRS or Fincen, two of the leading federal regulators dealing with cannabis intersecting with the dollar.

The memo, which requires financial services providers to regularly file reports on customers with cannabis accounts, was meant to provide assurances to banks who looked for a signal to process massive revenues being generated.

But many have remained reluctant to work with marijuana businesses because ongoing federal cannabis prohibition could trigger money laundering laws and other risks. That fear was somewhat accurate when then-U.S. Attorney General Jeff Sessions moved to rescind separate Obama-era guidance that generally protected state marijuana laws from federal interference.

Industry participants feared that it would scare-off major businesses like banks and credit unions from associating with cannabis operators. Instead, the new FinCEN data showed steady growth in the number of financial institutions maintaining marijuana industry accounts.

Meanwhile, back in Washington, a number of major Trump administration officials have indicated they want to see a clarity on cannabis banking issues. For example, Steven Mnuchin, the treasury secretary of the United States, has suggested that he wants state-legal marijuana businesses to be able to store their profits in banks. Ledger-Safe believes that the best solution is treat cannabis merchants like any other high-risk industry: gambling, tobacco, and even firearms, ensuring that their transactions are secure and monitored for suspicious activity related to money laundering.

The future is currently unclear, but at Ledger-safe we are building technology to ensure that whatever the outcome, merchants can ensure that their are lowering risk for their finacial partners by accurately and automatically complying with federal money serving laws.