According to September 2017 data from the federal Financial Crimes Enforcement Network (FinCEN), more than 300 banks and nearly 100 credit unions are providing services to cannabis-related businesses. The number of institutions doing business with the sector has been steadily increasing since the second quarter of 2014.
According to the data — first reported by Tom Angell for Forbes — the number of credit unions providing services to canna-businesses is at its highest levels – even with the previous peak in the second quarter of 2017. Banks providing services peaked in the first half of the fourth quarter last year before declining slightly in the second half of the quarter. In the report, the agency suggests that the short-term declines could be explained by filers “exceeding the 90 day follow-on Suspicious Activity Report (SAR) filing requirement.”
“Several filers take 180 days or more to file a continuing activity report. After 90 days, a depository institution is no longer counted as providing banking services until a new guidance-related SAR is received.” – FinCEN “Marijuana Banking Update”
The agency uses three phrases to describe a financial institution’s relationship with a cannabis company in the SAR:
- The Marijuana Limited filing means the financial institution’s due diligence indicates that the marijuana-related business does not raise any of the red flags as defined in the Cole Memo and is compliant with the appropriate state’s regulations regarding marijuana businesses. The financial institution is providing banking services to the marijuana-related business.
- The Marijuana Priority filing means the financial institution’s due diligence indicates that the marijuana-related business may raise one or more of the red flags as defined in the Cole Memo or may not be fully compliant with the appropriate state’s regulations regarding marijuana-related businesses. The financial institution is providing banking services to the marijuana-related business while further investigation is being conducted.
- The Marijuana Termination filing means the financial institution decided to terminate its relationship with the marijuana-related business for one or more of the following reasons:
- The financial institution’s due diligence indicates that the marijuana-related business raises one or more of the red flags as defined in the Cole Memo.
- The marijuana-related business is not fully compliant with the appropriate state’s regulations.
- The financial institution has decided not to have marijuana-related customers for business reasons.
At the end of September 2017, the report counted 400 total institutions providing services to the industry – the same figure counted at the end of August 2017. In October 2016, that figure was 318.
Editor’s note: This article was updated on 1/4 to give due credit to cannabis reporter Tom Angell for first reporting on the FinCEN data set.
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