The number of banks and credit unions reporting that they provided services to cannabis-related businesses has remained relatively unchanged since 2019, with several representatives from financial institutions citing regulatory risk as the reason they didn’t provide services to the sector, according to a new report by the Government Accountability Office.
The GAO was asked by members of Congress to prepare a report on financial institution services to cannabis-related businesses, or CRBs. Financial institutions are currently required to file suspicious activity reports with the Financial Crimes Enforcement Network when providing certain services to CRBs, as cannabis remains illegal under federal law. An analysis of those reports by the GAO found that the number of filers grew steadily from 2015 onward until plateauing in 2019, at fewer than 1,200 filers annually.
Still, FinCEN noted that the reports do not capture all banks and credit unions providing ongoing services to CRBs, as they do not distinguish between occasional and ongoing services. The agency also noted that some financial institutions may file a report even if the business isn’t directly involved in the growing and selling of cannabis, but instead only provides services to CRBs.
In addition, the GAO conducted focus groups and interviews with representatives from financial institutions and CRBs as well as trade groups representing both sectors.
Participants at financial institutions that do not serve CRBs cited regulatory risk behind their decisions, including concerns that such activity would lead to adverse reactions from federal banking regulators. CRB participants cited concerns about bank account closures, high fees and high interest rates for loans. They also said their employees face challenges in accessing financial services because of their work in the cannabis industry.
The GAO also asked participants about whether their institutions would start serving CRBs if Congress passed a federal safe harbor law shielding banks and credit unions from civil and criminal liability in states that legalize cannabis. Some participants said such a law could lead their institutions to begin serving or expand existing services to such businesses. Others said it would not change their policies without other reforms, such as federal
