Banking Cannabis-Related Businesses

Position

• ICBA does not advocate for the legalization of cannabis.
• ICBA advocates for federal legislation establishing an effective “safe harbor” from federal sanctions for banks that choose to do business with cannabis-related businesses (CRBs), including businesses that provide products or services to CRBs, in states where cannabis is legal under state law.
• This safe harbor must extend to banks that serve businesses that may serve CRBs (“ancillary businesses”) such as landlords, accountants, utility providers, and others as ancillary businesses may be paid in funds ultimately derived from cannabis sales.
• Federal banking regulators should not be able to threaten or limit a bank’s deposit insurance, downgrade a loan made to a CRB, force a depository institution to cease providing banking services to a CRB, or take any other prejudicial action in a state where cannabis is legal, solely because the customer is a CRB.
• ICBA opposes any effort by a state or municipality to establish a publicly owned bank or credit union to service the cannabis industry. Traditional banks are fully capable of serving this industry with the creation of an effective “safe harbor” to protect them from government or regulatory reprisal.

Background

Cannabis legalization, for both recreational and medical use, is spreading throughout the United States. Each election brings new states into the state-legal system and an overwhelming share of U.S. adults (88%) say that cannabis should be legal for medical and/or recreational use by adults according to a Pew Research Center survey.

After Ohio’s 2023 vote to legalize cannabis for adult-use, more than 50 percent of the U.S. population now lives in a state that has ended cannabis prohibition for adults—and nearly 75 percent live in a jurisdiction that has legalized medical or recreational cannabis.

Only Nebraska, Kansas, and Idaho have no public access cannabis programs.

As more states legalize cannabis for medical and/or recreational use, it is critically important that cannabis-related businesses (CRBs) have access to traditional banking services. At the federal level, cannabis remains illegal under the Controlled Substances Act.

As CRBs continue to mature, the conflict between state and federal law creates increasingly significant legal and compliance concerns for state and federally chartered banks that wish to serve these businesses or continue to serve existing customers that may also do business with CRBs. CRBs have limited access to the traditional banking system, forcing them to operate mostly in cash. Cash-only businesses, especially those with a high volume of revenue, pose a significant risk to public safety.