New York state’s top financial officials have joined the growing chorus of regulators and business leaders calling on banks to work with the legal cannabis industry.
Many financial institutions remain wary of possible sanctions for servicing businesses considered federally illegal.
Earlier this month, New York’s Department of Financial Services issued new guidance to encourage state-chartered banks and credit unions to provide access to financial services.
The 10-page memo – directed to the chief executive officers of those institutions – calls the cannabis industry’s banking woes an urgent issue and outlines top safety and regulatory challenges, including:
- “Forcing medical marijuana and industrial hemp businesses to operate solely with cash creates a public safety issue, as cash intensive businesses and their suppliers, employees and customers become targets for criminals.”
- “Large amounts of cash distributed outside the regulated banking system is unacceptable and creates risks to the companies and their employees and business partners … New York must act.”
Under the new guidance, New York says its Department of Financial Services will not sanction any state-chartered bank or credit union that offers services to a New York-based medical cannabis firm, as long as that institution is compliant with:
- The guidance provided by the 2013 Department of Justice memo from then-Deputy Attorney General James Cole.
- The 2014 Financial Crimes Enforcement Network (FinCEN) guidance.
- New York laws and regulations.
As more states legalize marijuana, regulators and lawmakers have scrambled to address banking issues.
But officials within the banking industry continue to argue that state-based solutions won’t move the needle.
“We do have many banks that have an interest in banking these businesses,” James Thurston, a spokesman for the Ohio Bankers League, told Marijuana Business Daily in June.
“But as long as there remains this conflict with federal policy, they remain very reticent to go near marijuana businesses because there is just too much risk and work.”