Several years ago at the PBC Conference on cannabis banking, the keynote speaker, then Deputy Attorney General James Cole, lamented that his “Cole Memorandum,” published in August 2013, directing Attorneys General not to focus their prosecutorial resources on state-licensed cannabis businesses and used by FinCEN in drafting and issuing its guidance on banking marijuana in February 2014, created an unduly restrictive compliance regime for banks and credit unions electing to bank cannabis businesses.

Since 2014, the number of states where cannabis is legal in one form or another has doubled.  Over 70% of Americans want to see cannabis legalized.  Both the Biden and Trump Administrations have tried, or are considering, re-scheduling cannabis from Schedule I to Schedule III of the Controlled Substances Act.  The SAFE Banking Act, or its more recent iteration, the SAFER Banking Act, which would provide a legal safe harbor to financial institutions banking cannabis, has languished in Congress for eight years.

Despite these developments, banks and credit unions banking cannabis, must rely on a guidance that has not been revised in twelve years.  This guidance entails many compliance burdens, risks and costs which has led many financial institutions to stay away from this space.  Furthermore, the guidance is just that — guidance.  It does not have the certainty or clarity of a regulation.  This also has kept many financial institutions at bay.

The good news is that, over time, the regulatory expectations regarding banking cannabis have become somewhat clearer, and the reputational risks of banking cannabis have diminished as the stigma associated with cannabis has largely gone away.

Cannabis is here to stay.  Because of this, cannabis banking is here to stay.  If financial institutions are not yet banking cannabis, the time to consider doing so is yesterday.  While there are certainly risks associated with cannabis banking, the rewards can be great.