According to a federal report, there is an increase in the number of banks and credit unions accepting to service marijuana businesses in the third quarter of 2019.
In the first quarter of 2019, there were 493 banks and 140 credit unions accepting marijuana businesses. In the second quarter, the number of banks and credit unions increased to 553 and 162, respectively. They submitted documents showing that they will be conducting business with legal marijuana businesses.
Accepting to conduct business with marijuana companies is viewed as a risky move in the financial sector because marijuana remains a federally controlled substance. However, the increase shows that banks are willing to take the risk as the lawmakers push to solve the issue of marijuana banking.
The Secure and Fair Enforcement Banking Act (SAFE) was approved before the end of the second quarter of 2019 by the House Financial Services Committee. The bill serves to protect financial institutions from being penalized for servicing marijuana businesses.
The bill was voted in by the whole House, therefore sending it directly to the Senate. Providing safe and secure banking services to the marijuana businesses will help mitigate risks associated with operating on a cash-only basis and promote transparency.
Hemp and its derivatives, which were legalized under the Farm Bill in 2018, have been denied access to services by the banks. However, Congressman Perlmutter is focused on ensuring that financial services are extended to hemp and CBD businesses. While in the House last month, the congressman urged the Treasury Department to provide legal hemp and CBD businesses with guidance.
In August, The Financial Crimes Enforcement Network released its latest update on the analysis of suspicious activity reports (SARs) that are filed per the 2014 cannabis banking guidance by the financial institutions under the Obama administration. The report showed that as of the second quarter of 2019, there was a total of 87,249 SARs related to marijuana businesses received by FinCEN.
The SARs were broken down into different types by FinCEN. 67,378 of the SARs were described as Marijuana limited, which referred to marijuana businesses that met the agency standards by complying with the laws of the state.
6,900 were referred to as marijuana priority, which means that the companies were not fully compliant with the state laws; thus, they would be investigated. Twenty-two thousand of the SARs were termed as marijuana termination, which meant that the businesses had violated at least one state regulation, which led to the termination of its relationship with the bank.
Analysts believe that marijuana companies like Green Hygienics Holdings Inc. (OTCQB: GRYN) and HTC Extraction Systems (TSX.V: HTC) hope that the Senate passes the SAFE Act so that this banking issue is solved once and for all.
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