A North Carolina bank last week announced the launch of a new program to provide banking and other financial services to cannabis businesses across the country. In a statement released on the April 20, the notorious cannabis high holiday, Raleigh-based West Town Bank & Trust said that the program will provide the “cannabis industry with secure, convenient, and modern financial tools, enabling businesses to operate more efficiently and reduce the risks associated with operating a cash-intensive business.”
“As one of the first banks to roll out a hemp banking program after the 2018 Farm Bill, we witnessed first-hand the role dedicated banking programs played in advancing the entire industry,” said Ross Sloan, West Town Bank & Trust senior vice president of hemp and cannabis banking. “We’re excited to do the same for cannabis businesses, offering them the banking services [that] fuel not only their growth, but the growth of the entire cannabis industry.”
Under current federal regulations, banks are subject to penalties under money laundering and other laws for servicing state-legal marijuana businesses, leaving the cannabis industry to operate in a risky environment heavy in cash. Democratic Rep. Ed Perlmutter of Colorado has tried to rectify the problem with the SAFE Banking Act, which he first unveiled in the House of Representatives in 2013 and has reintroduced every congressional session since. Although the bill has been approved in the House both as stand-alone legislation and as an amendment to other bills on several occasions, the Senate has failed to vote on the measure. The restrictions have also caused banks to deny services to hemp businesses, despite the legalization of the crop under the 2018 Farm Bill.
Broad Support for Cannabis Banking
In November, a bipartisan group of 24 state governors sent a letter to congressional leaders calling for the passage of the SAFE Banking Act. In their message, the governors noted that 37 states, four U.S. territories and the District of Columbia have passed measures that legalize some form of cannabis use.
“Medical and recreational cannabis sales in the U.S. were estimated to total $17.5 billion last year, but because of antiquated federal banking regulations, almost all cannabis transactions are cash-based,” the governors wrote. “Not only are cash-only businesses targets for crime, cannabis businesses are further disadvantaged compared to other legal businesses by being unable to open bank accounts or obtain loans at reasonable rates. The cannabis industry is legal in some form in the majority of U.S. states and it is too large of a market to be prohibited from banking opportunities.”
One of the governors who signed the letter, Gov. Gretchen Whitmer of Michigan, noted that the voters of her state have clearly communicated their desire for cannabis policy reform.
“Since 2018, our state has worked with industry businesses to pass laws to make cannabis safe and accessible. However, operating all-cash businesses poses an inherent danger for businesses in our state, and the SAFE Banking Act provides clear guidelines for our financial institutions to bank with these businesses,” Whitmer said about the governors’ action. “This letter sends a clear message to Congress that our states are looking for a real solution to a real problem, and we support them to get this done.”
Without action on the issue at the federal level, some states have proposed legislation to permit banking services for cannabis businesses, including a successful 2020 bill in California. Already in 2022, lawmakers in Pennsylvania and New York have considered measures to ease restrictions on banking services for cannabis businesses.
Mel Barnes, the director of the hemp and cannabis banking program at West Town Bank & Trust, said that the bank’s existing infrastructure and successful track record in the hemp space will raise the standard for cannabis financial services.
“Legal cannabis businesses should be able to access the same financial services as other industries,” said Barnes.