- Key insight: Cannabis businesses are accessing banking services, but such state-legal businesses have a limited array of willing partners and elevated costs because of elevated and costly compliance burdens, according to a report from the Government Accountability Office.
- Supporting data: A thousand banks and credit unions filed cannabis-related SARs in 2024, the report found.
- Forward look: A federal safe harbor could encourage more banks to serve cannabis businesses, but reducing BSA compliance burdens could be equally important.
While cannabis businesses are obtaining banking services, a new report from the Government Accountability Office found that obtaining and maintaining financial services is still difficult and costly for those businesses.
While institutions have some federal guidance on working with cannabis businesses and recent
"[Cannabis-related businesses, or CRBs] may experience bank account closures, high fees for bank accounts, and high interest rates for business loans," the report found. "Further, accepting customer payments is difficult largely because two major credit card companies prohibit cannabis purchases.
"In addition, CRB owners and managers reported that they and their employees face challenges accessing personal financial services due to their work in the cannabis industry," the GAO report continued.
Federal regulators officially leave it to banks to assess their appetite for risk as it pertains to the cannabis industry, which is legal for recreational use in 24 states and the District of Columbia but remains illegal federally. Cannabis banks that do currently provide services to cannabis companies do so under guidelines laid out in a
According to Fincen data cited by GAO, roughly 1,000 banks and credit unions — or 11% of all insured depository institutions — filed suspicious activity reports on transactions involving cannabis businesses in 2024. The GAO report notes that some of these may involve occasional transactions and not always ongoing customer relationships between banks and cannabis companies.
GAO's report draws on focus groups and interviews with 74 financial-institution participants and 51 cannabis business owners and managers. GAO conducted 17 focus groups overall, 9 with financial institutions and 8 with cannabis-related businesses. Of the 9 financial-institution focus groups, 5 included institutions that served cannabis-related businesses.
The study found that ongoing legal and regulatory hurdles discourage cannabis banking arrangements in some cases. Three of four focus groups and five of six interviews with firms that do not serve cannabis businesses cited regulatory risk as an ongoing deterrent. Firms reported needing to dedicate staff, implement special transaction monitoring systems and customer due diligence as additional hurdles.
"These risks include concerns about adverse supervisory actions from their federal banking regulator and conflicting federal and state laws on the legal status of cannabis," the
GAO also found banks still have reservations about the legal ambiguity of the industry. Some banks surveyed said they limit the types of cannabis services they will support and often prefer to service tangential businesses like cannabis law firms, consultants and other non-"plant-touching" related businesses. Two of five large banks surveyed said they only offer services to companies that are ancillary to actual cannabis growing and distribution.
"Owners and employees of ancillary businesses may have fewer challenges accessing personal financial services, according to our focus group … two of our eight focus groups consisted of owners and managers of ancillary businesses, and when polled, one-third or fewer of these participants said they and their employees had faced challenges maintaining a personal bank account or getting a mortgage," the report notes. "In contrast, a majority of participants polled in the six focus groups with owners and managers of plant-touching CRBs said they and their employees had faced challenges related to both personal bank accounts and mortgages."
The report also found that a federal safe harbor may not fully solve issues in the cannabis banking sector. While many institutions that currently avoid cannabis banking said a safe harbor might make them more willing to serve some cannabis businesses, existing cannabis-bankers were less likely to say it would materially change their operations or services.
"A safe harbor law could have greater effect if it reduces the compliance costs of serving CRBs," the report goes on. "Participants in seven of nine focus groups and eight of 11 interviews with institutions that both do and do not serve CRBs noted that federal actions to reduce compliance burdens would significantly affect their decisions about whether and how to serve CRBs."
Legal changes could be coming for cannabis. President Donald Trump in December last year
The DEA held formal hearings over the summer but the rescheduling process remains a work in progress.
Rescheduling the substance to Schedule III would not eliminate the legality issues related to selling scheduled substances, but it would eliminate a key tax restriction and could free up capital for cannabis firms. Under current law, Section 280E of the Internal Revenue Code prevents companies trafficking in Schedule I and II controlled substances from taking standard business deductions. Because 280E applies only to Schedule I and II substances, a move to Schedule III would allow the industry to deduct expenses on federal filings, improving cash flow, margins and potentially lending eligibility.
