A number of smaller banks, supportive of the cannabis industry, are drying up
Financial analysts are raising the alarm because banking institutions, which not so long ago were hesitant to even accept accounts from businesses that dealt in the cannabis industry, seem to be declining in numbers on their flow charts. If they are, it is most likely to the natural ebb and flow of the markets and today’s ever-changing attitudes toward the acceptance of marijuana in mainstream American life.
This terrible COVID-19 pandemic, which has disrupted the lives and habits of even the most recluse citizens has changed the way we think about other people and how we judge what is good for us and what to stay away from. Banking is just one example.
Banks that can offer quality personalized online service and still maintain high-quality attention to their clients naturally received more accounts. Those holding on to traditional ways lost clients who were unwilling to come in and sit down to talk about it.
Banks are still required to file a Suspicious Activity Report (SAR), if there is any hint that the money involved might have something to do with a crime, to the Financial Crimes Enforcement Network (FinCEN). They are now reporting that the number of banks doing business with the cannabis industry has declined in the past few years.
When Congress passed the Farm Bill in 2018, they changed the way banks thought about and dealt with the cannabis industry in general and the hemp industry in particular. Hemp was declared clean and legal since it contained less than 3% THC (tetrahydrocannabinol) and, therefore, could not be used to “get high.” It was no longer necessary for the banks to submit SAR paperwork when dealing solely with Hemp. This obviously had an impact on the number of banks that were no longer required to send in SAR paperwork.