Marijuana Banking Update

Marijuana Banking Update

What We Might See In 2019

By: Allison Coccia

Marijuana Money

The marijuana industry feels the momentum. They are beefing up their operations and hiring even more high-powered lobbyists to capitalize on the political philosophical shift that comes with a new Democrat-led U.S. House of Representatives and an election-free year. Bolstered by a Pew Research Center Study in October of 2018 that found that 62% of Americans favor the legalization of marijuana, they want to make history.

In January, Rep. Earl Blumenauer (D-OR) introduced H.R. 420 the Regulate Marijuana Like Alcohol Act. It calls for marijuana to be regulated by the Bureau of Alcohol Tobacco Firearms & Explosives and removes it from the controlled substances list.

The new House Rules Committee Chair Jim McGovern (D-MA) “indicated that he would prioritize legislative measures that limit federal interference in legal marijuana states, expand medical cannabis access for veterans, and amend federal banking restrictions on the legal cannabis industry.”

Rep. McGovern replaces outgoing Rules Chair Pete Sessions (R-TX), who according to The, “used his position as chairman of the House Rules Committee to block House floor members from voting on over three-dozen marijuana-related amendments during his leadership tenure.”

But, marijuana proponents may have a tough road ahead. In 2018, Senate Majority Leader Mitch McConnell, while authoring a bill and leading the effort to legalize industrial hemp said, “I do not have any plans to endorse the legalization of marijuana,” he said, adding that marijuana and hemp are “two entirely separate plants.” Saying of hemp,”… It has an illicit cousin which I choose not to embrace.” Industrialized hemp was ultimately made legal at the end of 2018 via legislation declassifying hemp as a Schedule 1 Drug. Amending the Controlled Substances Act was no small feat.


Marijuana has long been classified a Schedule 1 Drug under the Controlled Substances Act. It is defined by the US Drug Enforcement Agency (DEA) as, “drugs with no currently accepted medical use and a high potential for abuse.” Marijuana is included among the likes of heroin, LSD, peyote, bath salts, ecstasy, and Quaaludes.

Medical marijuana use has now been legalized in 30 states with only 9 states and Washington DC legalizing its recreational use. However, these states, including Pennsylvania, are struggling with its implementation, because according to, in this “$9 billion industry, only 30% have bank accounts.”

Why aren’t banks clamoring to work with these marijuana related businesses (MRBs)? Because federal law prohibits them from doing so. puts it best, “Any bank that provides services to a legal marijuana business faces possible criminal prosecution for ‘aiding and abetting a federal crime and money laundering.’” State and federal law are in conflict. As long as marijuana remains classified as a Schedule 1 drug, or no statutory or regulatory changes are made, it technically remains illegal to bank it.


Prior to 2018, some banks might have felt safe under the umbrella of the Cole Memorandum, Obama-era guidelines that provided safe harbor for financial institutions, promising not to hold states and individuals who sold marijuana legally under state law liable for prosecution despite it being illegal under federal drug law. In January of 2018, then-US Attorney Jeff Sessions officially rescinded that memo, leaving states that had
legalized marijuana use in various forms, confused and without recourse.

As an antidote to this confusion, Congress unleashed a number of bills last session.


Ed Rep. Perlmutter (D-CO) introduced H.R. 2215 or the Secure and Fair Enforcement Banking Act of 2017 (SAFE Act)

“This bill prohibits a federal banking regulator from:

1. Terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate marijuana-related business;
2. Prohibiting or otherwise discouraging a depository institution from offering financial services to such a business
3. Recommending, incentivizing, or encouraging a depository institution not to offer financial services to an account holder solely because the account holder is affiliated with such a business; or
4. Taking any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased to such a business.

As specified by the bill, a depository institution shall not, under federal law, be liable or subject to forfeiture for providing financial services to a legitimate marijuana-related business.”

This legislation was supported by the Independent Bankers of America (ICBA) and enjoyed some bipartisan support, but it never saw a vote. The ICBA made it clear, “ICBA does not advocate for legalization of cannabis at the federal level or otherwise, but we do support the creation of an effective safe harbor from federal sanctions for banks that choose to serve MRBs in states where these businesses are legal under state law.”


Senators Cory Gardner (R-CO), Elizabeth Warren (D-MA), Congressmen David Joyce (R-OH) and earl Blumenauer (D-OR) jointly introduced companion bills S.3032 and H.R. 6043 or the Strengthening of the Tenth Amendment Through Entrusting States Act (STATES Act).
• The bill “creates an exemption to the Controlled Substances Act for US states and territories that have reformed their laws with regard to marijuana policy, effectively restraining undue federal intervention

Maintains federal legislative provisions (aka “guardrails”) to deter:
• The interstate trafficking of marijuana into prohibition states from legal states
• The prevention of those under 18 from working in the cannabis industry
• The prevention of those under 21 from purchasing marijuana (unless recommended by a state-qualified physician to treat a medical condition)
• Unsafe production conditions
• Provides greater flexibility for lawmakers in non-legal states to reform their laws in a manner that reflects the will of the of their constituents and regulates cannabis commerce
• Removes industrial hemp from the Controlled Substances Act”


Among many other bills, both the SAFE Act and STATES Act have been reintroduced this session. As of press time the House Financial Services Committee has already held a hearing on the SAFE Act. In November 2018 the Pennsylvania Department of Banking and Securities (DOBS) included Guidance on Marijuana Banking on their website. DOBS points to the Financial Crimes Enforcement Network’s (FinCEN) guidance released February 14, 2014 FIN-2014-G001: BSA Expectations Regarding Marijuana-Related Businesses to assist financial institutions in meeting their Bank Secrecy Act (BSA) obligations and also provides Recommendations to financial institutions wishing to bank marijuana in Pennsylvania. They can be found on their website here:

As part of his Senate confirmation hearing in January of 2019, now -US Attorney General William Barr suggested that while he does not support the “wholesale legalization” of marijuana, he would take a different approach than that of former Attorney General Jeff Sessions. “As discussed at my hearing, I do not intend to go after parties who have complied with state law in reliance on the Cole Memorandum,” So far, he has not committed to
restoring the Cole memorandum but has indicated that he would take it under great consideration.

With a majority of states now having some form of legalized marijuana use being left in the lurch and a new political climate in Congress, 2019 might be the year when we see some movement or historic legislative changes.

Sources: healthcare/416781-congress-is-going-tomake-marijuana-moves