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The marijuana-legalization movement has spawned a booming industry that produces billions of dollars of cash every year. But finding a safe place to put all that money isn’t easy, as many financial institutions won’t touch funds related to a drug that remains banned by the federal government. Credit card issuers also refuse to offer payment services.
The state-level cannabis business is very cash-intensive, which some of the bigger banks don’t want to deal with just yet. Meanwhile, community and regional banks have filled the void, says Joe Bour, Chief Financing Solutions Officer for First Federal Bank. “Big banks have not taken on a risk profile where they will support” cannabis-related businesses, he adds.
According to Mr. Bour, First Federal, located in Live Oak, Fla., provides banking services to the cannabis industry in Florida and other states where marijuana, whether for recreational or medical use, is legal. Medical cannabis is nearly a $2 billion-a-year industry in this state, with more than 25 active licensed operators growing and processing the products they sell in their 700-plus dispensaries throughout Florida. To learn more about medical marijuana regulations in Florida, visit the Office of Medical Marijuana Use at knowthefactsmmj.com.
Banking cannabis money is usually done on a case-by-case scenario, says Jannon Forsythe, Specialty Compliance Officer at First Federal Bank.
A bill introduced in Congress in 2023 aims to help end the U.S. financial services industry’s reluctance to handle cannabis cash, extend credit, and offer insurance and payment processing. The Secure and Fair Enforcement Regulation Banking (SAFER) Act says it would provide “protections for federally regulated financial institutions that serve state-sanctioned marijuana businesses.”
Both Mr. Bour and Ms. Forsythe say such a law would provide regulatory clarity for financial institutions working with the cannabis industry while the substance remains illegal at the federal level.
They also said banks serving the cannabis industry are monitoring a proposal launched by the U.S. Department of Justice in 2024 to reclassify marijuana from a Schedule 1 to a Schedule 3 drug, which would move marijuana to a less-restricted category.
Given the current conditions of marijuana banking, Mr. Bour suggests that cannabis businesses partner with financial institutions that have a track record of supporting their industry and work with attorneys and certified public accountants with backgrounds in the marijuana sector.
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