[Canniseur: Great news! This leaves cannabis banking to the smaller banks, giving them a leg up in the industry. Those first in definitely will have the competitive edge. Further, I’d love to see the day where Chase Bank turns down Constellation Brands business.]
The SAFE Banking Act is making its way through the legislative process, but many big banks still plan on avoiding cannabis clients, according to a Wall Street Journal report. In fact, no major bank publicly supports the bill’s passage and any content between Congress and the bill were initiated by Congress.
While the SAFE Banking Act is designed to protect banks with cannabis clients from prosecution, banking leaders say that government-mandated compliance obligations remain a sticking point. Cannabis transactions remain illegal under federal money laundering rules and banks aren’t willing to take the risk until the drug is fully legal in the United States.
Many large banks were recently fined for inadequate anti-money laundering controls, which makes them even less likely to take the risk. For instance, US Bancorp paid $613 million in fines and penalties in February 2018 after failing to report suspicious activities to regulators and ignoring red flags for years.
The good news is that many smaller banks may be willing to assume the risk and open the door to legitimate banking for cannabis companies. In particular, credit unions and local banks in states where cannabis has been legalized could see a tremendous new growth opportunity.
Banking access enables cannabis companies to not only safely store their revenue, but also potentially access credit card processing, small business loans, mortgages, and other financial products that mainstream businesses enjoy.