Marijuana Business Magazine July 2019

Marijuana Business Magazine | July 2019 62 G etting a bank account remains one of the most difficult challenges of running a marijuana business, despite greater public, political and legal acceptance of cannabis. While banking pickings are slim—roughly 630 banks and credit unions were serving U.S. marijuana-related companies as of March 31, according to federal data (see chart)—every state has at least one financial institution that serves cannabis businesses, said Gary Rosen, a partner in the advisory group of New York City-based Marcum, a national business and accounting firm. What does it take for a marijuana business to land an account at one of these banks or credit unions? It depends on the internal financial and compliance controls the business has and how thorough and organized its records are. The state where a marijuana company operates can also play a role. TOUGHER REGS, MORE OPTIONS It’s important to remember the guidance issued in 2014 by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). FinCEN outlined how banks can serve marijuana clients without attracting unwanted attention from the federal government. Many state-legal markets, both new and old, tailor their regulations to compel marijuana businesses to meet certain recordkeeping requirements. Those and other requirements make it easier for banks to fulfill their reporting responsibilities to FinCEN. “Generally, the tougher your regulations are, the easier it is to gain banking, because the financial institutions feel more comfortable that they can honor the FinCEN guidelines,” said Los Angeles cannabis attorney Hilary Bricken. Bricken offered Washington and Nevada as examples of states where the regulations make it easier for banks to take cannabis clients. Washington state, she said, is “protectionist,” with a “significant residency requirement,” plus “a small industry population” and a single regulatory entity that oversees everything. “Those factors combined have really opened the doors for banking with regional banks and small credit unions,” she said. As for Nevada, Bricken said, “they (regulators) treat their cannabis businesses like casinos, with very severe consequences for violating the rules. They’re very concerned about the impact at the local level, so it’s very tightly regulated at the state level and at the local level.” Other states where banks have shown a greater-than- average willingness to take cannabis clients include Florida, Illinois, Massachusetts, Minnesota and New York. “The East Coast states on the whole figured out really quickly that if they wanted their programs left alone by the feds, they needed to have robust regulations. That, in turn, made finding banks easier,” Bricken said. “No bank will participate unless the state has created an infrastructure that will tell the bank everything it needs to know off the bat.” By Omar Sacirbey LANDING A BANK ACCOUNT Hustle America There were 633 financial institutions—493 banks and 140 credit unions— serving U.S. marijuana- related businesses as of March 31. That’s up from 411 a year earlier and is nine times the number of financial institutions serving MJ companies in early 2014. The latest number represents around 6% of the approximately 10,000 banks and credit unions in the United States. Source: U.S. Treasury Department’s Financial Crimes Enforcement Network 500 450 400 350 300 250 200 150 100 0 Banks Credit Unions Second Quarter 2014 Third Quarter 2014 Fourth Quarter 2014 First Quarter 2015 Second Quarter 2015 Third Quarter 2015 Fourth Quarter 2015 First Quarter 2016 Second Quarter 2016 Third Quarter 2016 Fourth Quarter 2016 First Quarter 2017 Second Quarter 2017 Third Quarter 2017 Fourth Quarter 2017 First Quarter 2018 Second Quarter 2018 Third Quarter 2018 Fourth Quarter 2018 First Quarter 2019 493 140