According to this piece in the Fresh Toast, America’s four largest banks have been actively opening accounts for medical marijuana dispensaries. The article mentions a study done by MRB Monitor, which found that in Massachusetts alone, more than a third of those applying to get dispensary licenses had bank accounts either at Bank of America (BAC), Citigroup (C), Wells Fargo (WFC) or JP Morgan Chase (JPM). The most appear to have been at BofA. This is a surprising development, since BofA not long ago denied doing any marijuana-related business. But maybe we are starting to move past the major problem that these companies have had to collect and protect cash without banking relationships.
The federal government does not prohibit banks from having a marijuana client. In 2014, the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department issued guidance under the Bank Secrecy Act (BSA) to banks on how to serve pot companies. They require a substantial amount of due diligence, making sure they’re really licensed, etc. They also want the bank to confirm that the potential customer complies with the 2013 Cole Memo from the Justice Department to confirm the company is not doing bad things like selling to kids or being involved with organized crime. Finally they have to file “suspicious activity reports” (SARs) for all these clients. But if the bank deems the customer legit, no Cole memo issues and the like, its SAR can report that it is going ahead with opening the account.
And in December, 10 bipartisan Senators sent a letter to FinCEN asking for even more guidance. What does all this mean? It’s a pain in the neck to do, but they can do it. Why are they? A number of banks are charging substantial fees to open the accounts. Plus, well, the cannabis companies are generating a lot of cash. North American legal cannabis sales were $6.9 billion in 2016 and projected to go to $21.6 billion by 2021. Money talks!