The cannabis industry experienced a 62% year-over-year jump in banking options in the federal government’s most recent quarter.
The number of banks and credit unions actively serving the marijuana industry totaled 715 in the U.S. government’s fiscal third quarter, which ended June 30, federal data shows.
The data reflects a healthy increase in the number of financial institutions serving the cannabis industry, even when accounting for the roughly 35% growth in legal medical and recreational cannabis sales during that period.
Most financial institutions are staying away from the cannabis industry because of the burdensome regulations and lack of legal clarity, such as the potential for repercussions given that marijuana remains illegal on a federal basis.
The U.S. House recently passed, with strong bipartisan support, a cannabis banking bill that would permit financial institutions and insurance companies to serve state-lawful, cannabis-related businesses without fear of federal punishment.
But Senate passage is deemed less certain.
The banking figures are based on suspicious activity reports (SARs) required to be filed with the Financial Crimes Enforcement Network (FinCEN).
FinCEN, a bureau of the U.S. Treasury Department, monitors financial transactions to combat such financial crimes as money laundering.
Most of the nearly 30,000 marijuana-related SARs filed between June 30, 2018, and June 30, 2019, were routine in nature.
But the financial institutions did file 8,437 reports in that one-year period that raised enough red flags for the banks to terminate the customer relationship, according to the data.
Another 2,652 reports were classified as warranting further investigation.
Jeff Smith can be reached at [email protected]
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