Lack of access to the banking system remains one of the biggest problems for the cannabis industry. Despite tremendous growth in the past few years and even more aggressive growth expected in the near future, it is still difficult for cannabis businesses, what bankers like to call marijuana related businesses (MRB), to establish a banking relationship. As more and more states legalize the use of marijuana, has there been any progress?
First, a little history. Banks are prohibited from banking MRBs under federal law and risk prosecution for money laundering and aiding drug trafficking. In February 2014, following the issuance of the Cole Memorandum by the Justice Department, the Department of the Treasury Financial Crimes Enforcement Network (FinCEN) and the Department of Justice issued concurrent guidance to clarify how financial institutions could serve MRBs consistent with their obligations under the Bank Secrecy Act. The FinCEN guidelines state that in determining whether to serve an MRB, a financial institution should conduct due diligence including: determining whether the MRB is properly licensed, reviewing the license application, requesting from state authorities available information about the business, understanding the products and customers of the business, monitoring the business activities, remaining alert for suspicious business activities, and conducting periodic reviews of the business. A financial institution also should consider whether an MRB implicates one of the priorities of the Cole Memorandum. Finally, if a financial institution does decide to service an MRB, it would be required to file a Suspicious Activity Report.