Federal Data Appears to Show that 6% of Financial Institutions Are Handling Marijuana Related Businesses
August 23, 2017
While the conventional wisdom is that the state-legal marijuana industry is a 100% cash business, recent data published by the Financial Crimes Enforcement Network (FinCEN) shows that this may not be entirely true. Based upon an analysis of some 29,000 “Suspicious Activity Reports (“SARs”) required to be filed by banks whenever they believe that a transaction involves marijuana, there are some 368 depository institutions actively banking marijuana businesses in the United States. That’s roughly 6% of the total number of FDIC-insured entities (https://research.fdic.gov/bankfind/). While 368 is small relative to the total, it still means that there are more than “none.” The report can be found here: https://www.fincen.gov/sites/default/files/shared/Marijuna_Banking_Update_Through_Q1_2017.pdf
This isn’t news for those in the state-legal marijuana business. There appears to be a quiet network that helps new medical marijuana permittees to locate and enter into business relationships with selected financial institutions. However more options would always be welcome. The problem however is that there is not publically available information about banks that would be willing to enter into such transactions. The FinCEN data comes with no identifying information, not even generalized data about the size or general geographic location of the depository institutions that make up the 368. The next challenge for those in the medical marijuana business might be to try to track down some or all of the 368 in an effort to either obtain banking services or try to find more competitive alternatives to their present relationships.
The Regulated Substances Blog is intended to keep readers current on developments regarding medical cannabis legalization and regulation and is not intended to be legal advice. If you have any questions, please contact Daniel Clearfield at dclearfield@eckertseamans.com. Or you can contact any other member of our Regulated Substances Group.
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