More Banks Are Taking On Cannabis Clients
There has been an increase of banks and credits unions that have spoken on working with cannabis businesses. In recent times reports have come out about how these financial institutes have remained stable over the last quarter. This updated info has come from published federal data.
Going back from the last 3 quarters of 2020 those states have been falling consistently. This is partially happening because of overhauled reporting requirements from the Financial Crimes Enforcement Network. As well this is also due to the coronavirus pandemic. Yet things seem to have been sustainable over the most recent two quarters.
From March 31, there were 684 banks and credit unions that filed reports stating they were working with marijuana businesses. That’s the same number from the prior quarter, even though it still has not climbed back up to its peak of 747 in late 2019.
A significant cause for the prior drop in 2020 was the FinCEN. This organization is part of the Treasury Department, which has stopped including hemp-only businesses in their quarterly reports. This has been happening since the crop was federally legalized under the 2018 Farm Bill. Which has contributed towards a piece of the dip as compared to prior numbers that counted hemp-focused accounts.
“The number of depository institutions (DIs) banking marijuana-related businesses (MRBs) appears to have leveled off from a decline that started at the end of the 1st Quarter FY2020 (December 2019),” FinCEN said in its latest quarterly analysis. “The decline coincided with the release of guidance by FinCEN and financial regulators on providing financial services to customers engaged in hemp-related business activities.”
More Factor For Marijuana Banking In The United States
Another factor in the previous drop could have been the COVID-19 pandemic, which “may be adding to this apparent decline due to state imposed restrictions or closures and potential delays in SAR filings,” the federal agency continued.
Under the Obama administration in 2014a FinCEN guidance still remains in place. Which is banks and credit unions are required to present SARs if they choose to present financial assistance to cannabis clients. In the years since the amount of banks taking on marijuana clients has gradually increased. Yet this is has been the case until the current downward trend.
“Short-term declines in the number of depository institutions actively providing banking services to marijuana-related businesses (MRBs) may be explained by filers exceeding the 90 day follow-on Suspicious Activity Report (SAR) filing timeframe,” FinCEN said. “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.”
Going from the end of last quarter, there were 510 banks and 174 credit unions that documented working with marijuana businesses.
Will More Banks Work With Cannabis Clients Before Banking Reform is Passed?
Nevertheless, the number of financial institutes that appear to be working with the cannabis sector looks to be stabilizing at the current time. Now, these stats could change significantly. Especially if Congress passes any type of cannabis banking reform that would protect those institutions from being penalized by federal regulators. Back in April The House for the fourth time approved the Secure and Fair Enforcement (SAFE) Banking Act. However, its chances remain in question in the Senate.
In regards to cannabis banking legislation, Sen. Cory Booker had strong words for the matter. This past week he stated that he “will lay myself down” to block any other legislators who try to pass marijuana banking laws. Especially before Congress passes comprehensive cannabis reform like the federal legalization bill. This was as well revealed last week alongside Senate Majority Leader Chuck Schumer.
Back In June, 2 sponsors of the Senate version of the SAFE Banking Act, urged a markup of the legislation. To which Sens. Jeff Merkley and Steve Daines contended that it would help approach an important public safety issue. Though the Senate Banking Committee Chairman Sherrod Brown has also been transparent he’s not eager to advance the legislation. He went on to share his thoughts. He said “I think we need to look at a number of things,” and that the body is “not ready to move on it.”
Final Thought Cannabis Banking Stabilizing In The U.S.
As of now, the banking bill has 39 cosponsors in the Senate, in addition, to the head sponsor Merkley. This means more than a third of the chamber is already formally given their signature in support.
The SAFE Banking Act. would ensure that financial institutions could work with legal marijuana businesses without encountering federal punishments. Just the fear of dealing with the law has stopped many financial institutes from working in the cannabis industry. This alone has forced marijuana companies to operate only in cash. Operating only with cash makes them victims of crime and creates complications for financial regulators.
After it passed the House last Congress many kept an eye out for any movement to out of the Senate Banking Committee. This is Where it was assigned after being forwarded to the chamber. Except then-Chairman Mike Crapo did not hold a hearing on the bill. Even though discussion of working out specific provisions took place.
At the time lawmakers announced that the SAFE Banking Act was getting a House vote in 2019, there was pushback from some advocates. These individuals believed that Congress should have made federal reform and social equity more of a priority. Instead of begging with a bill viewed as essentially friendly to the interests of the industry.
Rep. Earl Blumenauer co-chair of the Congressional Cannabis Caucus and an original cosponsor of the bill gave some insight. Back in March, he said that the plan was to pass the banking reform first this session. This was because it “is a public safety crisis now,” and it’s “distinct—as we’ve heard from some of my colleagues—distinct from how they feel about comprehensive reform.”