Time for feds to allow marijuana banking

The U.S. cannabis industry is projected to reach $50 billion in size by 2026, according to Cowen & Co., with over half of the population living in a state where the drug is legal.

Surprisingly, many cannabis business must operate completely in cash since the federal government exerts significant influence on financial institutions through the FDIC. The government’s confusing stance on the matter has led nearly all banks to avoid providing banking services to the sector.

Marijuana is a Schedule I Controlled Substance with a “high potential for abuse” and “no currently accepted medical use”, according to the Drug Enforcement Administration. The Obama administration issued guidelines designed to reassure banks that they would not be punished for serving legitimate marijuana businesses back in 2014, but the policies fell short of granting immunity to prosecution or civil penalties and the drug remains federally illegal.


The appointment of Jeff Session as Attorney General by the Trump administration has further encouraged banks to stay away from the sector. As a long-time opponent to marijuana legalization, he has the power to undo much of the progress made on a federal level, including the 2013 Cole Memo that paved the way for state-level legalization.

Risk-averse financial institutions are even more unlikely to take on clients in the sector given these developments.

Currently, there are only a small handful of financial institutions that serve the cannabis industry and most do so quietly to avoid any problems. At the same time, cannabis businesses regularly cite lack of banking access as a top concern.

The good news is that some lawmakers are fighting for change. Senator Elizabeth WarrenElizabeth WarrenSenate GOP blocks defense bill, throwing it into limbo Restless progressives eye 2024 Poll: Harris, Michelle Obama lead for 2024 if Biden doesn't run MORE, a member of the Senate Banking Committee, has made it clear that everyone benefits from opening up banking access to the cannabis industry.

“You make sure that people are really paying their taxes,” said Sen. Warren in recent comments on the issue. “And it’s just a plain old safety issue. You don’t want people walking in with guns and masks and saying, ‘Give me all your cash.’”

Sen. Warren is correct on both points.

First, the government could benefit handsomely from open banking access. Currently, many businesses are forced to transact in cash, which is difficult to track for tax purposes. This means that many businesses could be under-reporting their earnings and paying less than they owe in taxes.

Open banking access makes these matters a lot more transparent by creating a paper trail that the government can use to ensure everyone is paying their fair share.

Second, cash storage and transport has also created a lot of safety issues for the industry. For instance, nearly 600 dispensary robberies have been reported in Denver since recreational marijuana was legalized three years ago.

Many of these businesses hold large amounts of  cash, which makes them more attractive targets than convenience stores or liquor stores. The acceptance of credit cards could greatly alleviate these concerns and bring crime levels down.

It’s time for the federal government to take action and open banking access for the cannabis industry. By doing so, it will make everyone’s lives safer and ensure that the rapidly growing industry is properly taxed and monitored as more states adopt legalization policies.

Frank Lane is the president of CFN Media a leading creative agency and media network dedicated to legal cannabis. CFN Media helps marijuana businesses attract investors, customers and capital.

The views expressed by Contributors are their own and are not the views of The Hill.