Coronavirus Pandemic Affecting Banking Relationship With Cannabis Industry

Cannabis Buds bankingFor 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.

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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.

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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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