Is There Banking Access for Marijuana Firms?


Oct. 26 2020, Updated 8:27 a.m. ET

Currently, banking services for marijuana firms are very limited due to the discrepancy between state and federal legislation about marijuana’s legality. 

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About the SAFE Banking Act

The SAFE (Secure and Fair Enforcement) Banking Act was the first standalone marijuana bill ever passed in the House of Representatives. Along with nearly unanimous Democratic support, almost half of the House Republicans also voted in favor of the bill.

Passed on September 25, 2019, in the House of Representatives, the SAFE Banking Act bill would protect banks and financial institutions from penalties for providing services to legitimate marijuana or hemp-related businesses. 

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Forbes reported in February 2020 that if the SAFE Banking Act were fully approved, banks would be able to provide loans and other important financial services to marijuana businesses. The financial services would extend not only to growers but to contractors and vendors involved in the marijuana business as well. 

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Republicans criticized the inclusion of marijuana banking protections in legislation intended to provide economic relief from impacts of the COVID-19 pandemic. Senate Majority Leader Mitch McConnell has said, “I am opposed to non-germane marijuana studies or aid to illegal immigrants.”

Marc Short, the Chief of Staff to Vice President Mike Pence, said that banking access for marijuana businesses “has absolutely nothing to do with coronavirus,” according to BankingDive. In contrast, Democrats argued that by enabling banking access for legal marijuana businesses, cash-operated business would decrease and help “mitigate the spread of the coronavirus.” 

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JDSupra stated that the marijuana industry has been largely left out of coronavirus relief legislation, even though it provided jobs and income tax revenue for local economies. 

Are marijuana companies prohibited from using banks?

Without the protections offered by the SAFE Banking Act, marijuana businesses are forced to operate on a cash basis, which makes many aspects of conducting business more difficult.

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There are dangers involved when marijuana businesses are forced to use cash instead of banking services. Electronic state tax payments aren't possible, so dispensary owners must hand-deliver large sums of cash to tax offices. Paying employees in cash is riskier and leaves them more vulnerable to crime.

Marijuana is classified as a Schedule 1 drug, which criminalizes the marijuana business even if states approve it. In April, FindLaw said, “The banking system is regulated by federal law, so banks risk charges of aiding and abetting a federal crime or money laundering if they choose to do business with marijuana-related ventures.”

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Marijuana businesses can struggle to find banks that will operate accounts for them. The money that banks collect from marijuana businesses can be considered laundered money. By working with marijuana businesses, banks face the possibility of losing their master account with the Federal Reserve, according to ACS Lab Cannabis.

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Which banks that accept cannabis businesses?

As of August 2020, Colorado was one of the only states that issued official guidance on how state-run banking institutions can work alongside legal hemp and marijuana companies, according to ACS Lab Cannabis.

According to a March 2020 report by FinCEN, 710 banks and 150 credit unions reported working with marijuana businesses. The percentage is small considering that there are about 12,000 banks nationwide.

Some banking and payment processing companies that accept hemp or marijuana business include Hypur, Evergreen Gateway, Alpha Merchant Bank, and PayQwick, Inc.


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