Cannabis-Banking: Movement on the Hill - WST

While Congress may not be making much progress passing a second COVID stimulus relief bill, something historic did happen in Washington D.C. last Friday, December 4th. The House of Representatives passed the MORE Act (the Marijuana Opportunity Reinvestment and Expungement Act) which would remove marijuana from the Controlled Substance Act effectively decriminalizing possession, cultivation, and consumption. Why is this groundbreaking, you ask? Because marijuana has been classified as a Schedule I drug since 1970 - and without congressional action, including rescheduling marijuana on the Controlled Substances list - cannabis-related businesses will continue to struggle to find financial institutions willing to provide services to their operations. While the MORE Act still needs to be approved by the Senate and signed into law by the Chief Executive, which does not appear likely in the current partisan environment, it would seem the writing is on the wall. Cannabis is coming to your institution.

If you have yet to develop a cannabis-banking program, expect this to be a topic of conversation with your next Bank Secrecy Act (BSA) exam – and a simple statement in your existing BSA program of either “yes, we’ll bank these businesses” or “no, we won’t bank these businesses” will no longer suffice. The expectation is that your institution develops a separate risk assessment, program, policies, and procedures to address all aspects of this emerging industry (marijuana, hemp, CBD, and recreational vs. medical usage).

Although passage of the MORE Act may not easily happen, this legislation is just one of multiple bills and amendments currently proposed at the federal level that would change the regulatory landscape for cannabis-related businesses and banks willing to provide services to them. With more than two-thirds of the states having already legalized medical marijuana and fifteen states permitting recreational use, the MORE Act is just the beginning of many more discussions related to cannabis-banking.

If you have questions about your cannabis-banking program, please contact our certified cannabis-banking professionals here at 10-D.

Authored by: Joann Lang, CAMS, CIA, CCBP