Even though marijuana decriminalization laws are gradually covering the US, the difference between the federal and state laws have confused a lot of us. Among the confused lot are the banks. Even though recreational use of marijuana is now legal in 33 states, it is still classified as a Schedule 1 substance under the federal law. As a result, banks have been rendered with fear in conducting any business with Marijuana companies.

Most bank organizations, such as Visa and MasterCard are scared to work with the Marijuana market as they are afraid to come under federal prosecution. Ultimately marijuana businesses have very little to no access to essential banking services. And these services include business loans, opening a checking account etc. As the banks and the credit unions are sticking to the sidelines on this matter, marijuana businesses have no options than to deal in cash. A company that deals exclusively in cash face a lot of security and growth obstacles, obviously!

But things have begun to improve for the last five years. According to the Financial Crimes Enforcement Network, amidst the third quarter of 2014 and the middle of 2018, the average number of banks and financial institutions that offer basic banking services have grown from 100 to 400. Towards the end of 2019, this number soared and surged, hitting a total of 723 depository institutions.

On the other side, if you have a look at the total number of different depository organizations in the United States, you will observe how little that number actually is. Though the amount of total banks is very fluid, the Federal Deposit Insurance Corporation (FDIC) lists that there are 8610 either insured or supervised institutions as of 30th September 2019. That amounts to only 8.4% of all depository institutions in the United States are carrying out business with the Marijuana market.

A study conducted by the American Banker between June 2015 and September 2016, included medical marijuana companies in Massachusetts. The study revealed that 34% of these businesses possessed an account with banks. These banks included giants like Bank Of America, Wells Fargo, JPMorgan Chase and Citigroup. Among these four, the study discovered that Bank Of America was the most accommodating. More than half of the medical marijuana companies have an account with the Bank Of America.

But this streak broke in 2019 as the business inched higher by just six numbers between the end of June’19 and the end Sep’19. The reason being, the financial institutions are waiting to see the SAFE (Secure and Fair Enforcement) Banking Act to pass the congress. In late September the SAFE act passed 321-103 in the House. But there is no chance of the act passing as the Senate Majority Leader Mitch McConnell has declared it on multiple occasions that any bill or act regarding Cannabis reforms won’t see the Senate floor.





