Federal Guidance to Enhance the Availability of Financial Services for, and the Financial Transparency of, Marijuana-Related Businesses: The Distinctly Separate Federal Approaches Between Marijuana-Related Businesses and Marijuana-Related Business Banking

Abstract

In general, state licensed marijuana related businesses (“MRB”) have difficulty obtaining standard banking services from financial institutions since marijuana remains illegal under federal law. The prevailing notion that additional federal action is necessary to open banking services to the marijuana industry is inappropriate. Since MRB banking is inherently high-risk, the argument for additional legal or regulatory leeway to encourage MRB banking is not a sound solution. Federal guidance is in place for all state and federal chartered banks and credit unions to provide banking services to MRBs. A limited number of financial institutions follow the federal guidance and offer MRB banking services in an open and transparent manner, yet the number of such financial institutions does not meet the overall demand of the marijuana industry. Reinforcement of the federal guidance and awareness of the current best practices within marijuana banking could encourage additional financial institutions to service MRBs. As more financial institutions make the business decision to enter MRB banking under existing regulatory expectations, greater transparency of the marijuana ecosystem will be made available to all stakeholders.

Keywords: Marijuana, Cannabis, Banking, Federal, Reserve, FRB, FDIC, NCUA, OCC, Bank, Credit Union, BSA, Treasury, Mnuchin, Congress, Risk