Despite the banking ban that restricts financial services for legal cannabis businesses, there has been increased transparency among financial institutions that work with the cannabis industry in the United States. According to data from the U.S. Treasury Department, over 800 banks and credit unions have submitted paperwork acknowledging their relationships with licensed cannabis businesses. This marks a significant increase from the previous year when the agency identified 553 banks and 202 credit unions providing banking services to marijuana-related businesses.
The banking ban is one of the major challenges facing the cannabis industry. Even though cannabis businesses operate legally in many states, financial institutions hesitate to work with them due to the federal illegality of cannabis. As a result, many cannabis businesses are forced to operate as cash-only businesses, making them vulnerable to theft and other criminal activities. Some businesses have found limited relief by working with credit unions or using cash holding companies, but traditional banks remain the preferred solution to this ongoing problem.
Despite two-thirds of the country allowing legal cannabis markets and over a third permitting recreational use, the lack of access to banking services has been a persistent issue. The SAFE Banking Act, bipartisan legislation aimed at preventing federal banking regulators from penalizing banks for working with legal cannabis businesses, has been introduced in Congress several times. While it received wide support and bipartisan approval in the House of Representatives, it faced obstacles in the Senate. The bill was reintroduced in Congress in April, and next week, the Senate Banking Committee is scheduled to discuss a newly introduced version called the Secure and Fair Enforcement Regulation (SAFER) Banking Act.
A survey conducted last year by Whitney Economics found that over 70 percent of participating cannabis businesses identified the “lack of access to banking or investment capital” as their top challenge. This contrasted with 42 percent of respondents citing “state regulations” and 39 percent mentioning the “influence of the illicit market” as significant burdens on the industry. The banking issue remains a pressing concern for the cannabis industry, and efforts continue to address this challenge at the federal level.
By FCCT Editorial Team
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