The number of financial institutions actively serving the cannabis industry appears to be leveling off following a steady decline that started in November 2019, according to data recently released by FinCEN.
Since November 2019, the cannabis industry has lost 63 total banks and credit unions willing to serve it – from 747 to 684 as of December 2020. From November 2019 to July 2020, 65 banks stopped serving the sector. The number rose to 690 the following month, dropped again to 678 in September but gained 7 financial institutions in October 2020, totaling 685.
In November 2020, the number fell just one and remained at a total of 684 by the end of last year. In all, there are currently 515 banks serving the industry and 169 credit unions, according to FinCEN.
The regulatory agency still relies on the Obama-era Cole Memo for industry enforcement, despite it being rescinded by former Attorney General Jeff Sessions as one of his first acts in the Trump Administration. That memo requires financial institutions to supply Suspicious Activity Reports (SARs) which measure the amount of potential risk carried by a company.
“The SAR reporting structure laid out in the 2014 guidance remains in place. FinCEN will continue to work closely with law enforcement and the financial sector to combat illicit finance, and we will notify the financial sector of any changes to FinCEN’s SAR reporting expectations.” – FinCEN, Marijuana Banking Update
As of December 31, 2020, the agency had received 130,709 SARs for “marijuana limited” (the code for a company not raising any red flags under the Cole Memo), 12,605 for “marijuana priority” (one or more red flags), and 36,932 for “marijuana termination” (for applicants that are not granted an account). The agency notes that several SARs contain more than one key phrase. FinCEN received a total of 170,975 SARs by the end of last year. As of June 30, 2019, the agency had received a total of 142,120 SARs.
The House last year approved a bill to allow cannabusinesses access to financial institutions; however, that bill was not taken up in the Senate, then controlled by Republicans.
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