More U.S. financial institutions are now offering marijuana banking services actively. According to one industry executive though, the actual number is lesser than data from the U.S. treasury indicates
Data by the Treasury’s FinCEN (Financial Crimes Enforcement Network) shows that the number of credit unions and banks that are actively banking cannabis-related businesses has risen steadily to 633 institutions at the end of Q1 compared to about 400 at the start of 2018.
However, Tyler Beuerlein, Scottsdale’s executive vice president for business development, feels that these numbers are misleading. Scottsdale is an Arizona-based Hypur, a tech provider that helps depository institutions bank highly regulated industries like cannabis.
According to Beuerlein, FinCEN numbers do not reflect the actual number of depository institutions that openly bank marijuana businesses since they’re based on Suspicious Activity Report Filings (SAR).
A SAR is usually filed when an account is suspected of being affiliated with a marijuana business, and can at times result in account termination/ closure.
A SAR does not necessarily indicate a transparent and open relationship between a cannabis business and a financial institution.
Instead, Beuerlein – who is also the vice chairperson of the Banking Access Committee for the National Cannabis Business Association – suggests that the estimate should be based on factors which show that a depository institution wants to actually serve cannabis businesses including:
- The institution actively banks at least 10 plant-touching operators
- The banking institution has dedicated programs to marijuana-based firms
- The institution has been actively looking to increase the number of cannabis businesses it serves
Following the description, Beuerlein says that the number of credit unions and banks serving the marijuana industry is less than 40.
Despite the relatively low number, Beuerlein said that credit unions and banks are now entering the space and believe that most of the plant-touching cannabis businesses can access banking services now.
More About the Situation:
- The Pacific Northwest has the highest concentration of depository institutions that actively serve cannabis-based businesses. According to Beuerlein, the greatest growth here is occurring in California.
- Beuerlein said that currently, banks outnumber credit unions in terms of the number of financial institutions that serve cannabis businesses. However, credit unions have a bigger volume of cannabis clients than banks.
- According to the 2019 Marijuana Business Factbook, 90% of ancillary businesses that serve the cannabis industry can access banking. On the other hand, only 76% of plant-touching companies can access banking.