Coronavirus Pandemic Affecting Banking Relationship With Cannabis Industry
For the third fiscal quarter in a row, the number of financial institutions reporting that they service state-legal cannabis businesses has declined, according to an article on MarijuanaMoment.com highlighting new federal data.
The reasoning behind the trend appears to be multifaceted and not necessarily a reflection of an increasing unwillingness for banks to take on the marijuana industry.
One of the most significant factors is related to a change in Suspicious Activity Report (SAR) requirements for hemp firms. FinCEN, which is part of the Treasury Department, stopped including hemp-only businesses in their quarterly reports since the crop was federally legalized under the 2018 Farm Bill — which accounts for at least part of the dip as compared to prior figures that counted hemp-focused accounts.
The federal agency also said in its latest report that the “COVID-19 pandemic may be adding to this apparent decline for two reasons.”
Some marijuana-related businesses “have likely been closed during this time period due to government imposed Phase 1 quarantine restrictions,” FinCEN said, adding that the pandemic may have also led to staffing shortages among depository institutions, leaving fewer resources to process SARs.
That said, most states allowed cannabis companies to continue to operate as essential services during the pandemic, and states like Illinois continue to see record-breaking sales month-over-month.
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