The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is being forced to reconsider marijuana banking protections that allowed financial institutions to accept funds from state legal marijuana businesses after the Cole Memo was rescinded and a bipartisan group of politicians sent them a letter requesting that they uphold Obama-era banking guidelines associated with state legal marijuana companies. It is funny to think that there have been any marijuana banking protections for cannabis businesses considering banking may be the number one issue marijuana business have had to contend with on a regular basis.
“We are reviewing the [banking] guidance in light of the Attorney General’s announcement and are consulting with law enforcement,” Drew Maloney, the U.S. Treasury Department’s assistant secretary for legislative affairs, wrote in a letter to members of Congress on Wednesday.
The letter is a response to a bipartisan group of 31 House members that had written the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) last month asking the agency to continue the cannabis banking guidance. Fifteen senators separately sent a similar letter.
“FinCEN’s stated priorities have allowed such businesses to conduct commerce more safely through financial institutions which reduces the use of all cash, improves public safety, and reduces fraud,” the House lawmakers wrote in their letter. “Leaving your guidance unchanged will continue to encourage small companies to make investments by freeing up access to capital. It will also further provide for well regulation and oversight through suspicious activity reports. Rescinding this guidance would inject uncertainty in the financial markets.”
Most marijuana businesses function on a cash-only basis because they cannot either find a bank that will accept their deposits or maintain a relationship with a bank. Florida’s First Green Bank, setup for the specific purposes of accepting cannabis businesses’ funds, but then later told their clients they need to close the accounts because the bank is being bought and the acquiring bank does not want to take the risk of accepting cannabis associated money.
Though many cannabis businesses may feel like FinCEN revoking policies protecting state legal cannabis related bank accounts is making no real difference to them, it is still policy moving backwards for the legal marijuana industry. Cannabis ancillary businesses see their merchant services revoked regularly over concerns about federal repercussions. Will merchant service problems increase if the Treasury Department go back on its Obama-era polices?