A record number of banks are now reporting that they’re working with state-legal marijuana businesses amid increased pressure on Congress to enact broader protections for financial institutions interested in servicing the cannabis industry and as the Biden administration’s rescheduling proposal advances, new federal data show.
The Financial Crimes Enforcement Network (FinCEN) has been tracking cannabis banking trends for the past decade, and its latest report for the second quarter of 2024 shows a record high, with 831 banks and credit unions reporting their active involvement with marijuana companies.
That’s up from 815 in the first quarter of 2024 and 799 in the prior quarter.
FinCEN compiles this data based on financial institutions filing requisite “Suspicious Activity Reports,” or SARs, for marijuana-related business clients.
There are several possible factors that could help explain the increase in banks working with cannabis businesses, including the expansion of state marijuana markets as more legalization laws have taken effect over time. It’s also possible financial institutions are more willing to navigate the space as congressional lawmakers across the aisle continue to discuss their shared interest in advancing codified protections for banks under the Secure and Fair Enforcement Regulation (SAFER) Banking Act.
That legislation cleared a Senate committee in 2023, but it’s still pending floor action. With limited time left this session—and competing legislative priorities during an election year—the chances that it moves through the Senate and GOP-controlled House in 2024 are unclear at best, however.
FinCEN has taken a much more detailed approach to its cannabis banking reporting in recent years compared to when it first started posting data, now providing insights about the types of SARs it has received and which states they come from. The agency’s spreadsheets now look back retroactively over a 10-year period dating back to the initial issuance of cannabis banking guidance in 2014 during the Obama administration.
State-by-state breakdowns of the data reveal wide disparities between the number of marijuana-related reports being filed by financial institutions in markets across the country.
For example, California led the pack with banks and credit unions filing 4,073 SARs in the quarter ending June 2024. Oklahoma, which has a medical cannabis system that’s allowed a massive proliferation of dispensaries, came in second with 2,562 SARs.
Colorado, the first state to enact adult-use legalization, had a relatively lower number, with 864 reports filed. Oregon had 436 SARs.
Then there are other outliers like Kansas, which has no regulated access to cannabis but where 363 SARs were filed. In Texas, with its restrictive low-THC medical cannabis program, there were 577 reports. Vermont, the country’s second-smallest state by population, had 487 reports.
These numbers are not a reflection of the number of banks that work with the industry, or the number of cannabis businesses within a given state, as one bank could file multiple reports and some SARs are to note a termination of services. It is also the case that different financial institutions may have varying interpretations of FinCEN guidance with respect to when they need to file reports about marijuana-industry clients.
FinCEN first provided the financial sector with guidance in 2014 that’s meant to help banks navigate the cannabis space while the plant remains federally prohibited. But advocates, stakeholders and lawmakers across the aisle have made clear that more needs to be done to normalize the sector and provide banks with certain assurances.
There’s still significant reluctance within the banking sector when it comes to working with businesses that involve a Schedule I controlled substance, and that’s reflected in the relatively low number of depository institutions that actually follow the guidance and take on cannabis clients.
A modest policy change like federal rescheduling wouldn’t provide specific banking protections like the SAFER Banking Act.
While the Biden administration is continuing its push to move marijuana to Schedule III, as recommended by the Justice Department earlier in 2024, the modest policy change wouldn’t provide specific banking protections like the SAFER Banking Act. The Congressional Research Service said in a report in August that rescheduling is “unlikely” to improve banking access for state-legal cannabis businesses.
Meanwhile, on the one-year anniversary of a Senate committee’s passage of the SAFER Banking Act in September, the Congressional Budget Office (CBO) released an analysis on the economic impact of the reform, including the likely increase in federally insured deposits from cannabis businesses by billions of dollars once banks receive protections for servicing the industry.
CBO also scored an earlier version of the marijuana banking bill after it cleared a House committee in 2019, finding that the federal government ultimately stood to save money if the reform was enacted.
Sen. Jeff Merkley (D-OR), the Democratic Senate sponsor of the legislation, told Marijuana Moment recently that it’s “great” and “helpful” that former President Donald Trump, the 2024 GOP nominee, has come out in support of the reform—though he similarly said the pathway to passage in the chamber is still unclear.
Meanwhile, senators Elizabeth Warren (D-MA) and Tommy Tuberville (R-AL) separately challenged the idea that there’s enough GOP support for the SAFER Banking Act to pass on the Senate floor during the lame-duck session following the election.
Warren accused certain Republican members of overstating support for the legislation within their caucus, while also taking a hit at Trump for doing “nothing” on cannabis reform during his time in office as he makes a policy pivot ahead of the election by coming out in support of the marijuana banking bill and federal rescheduling.
Many would like to see a Senate roll call vote on the bill before the end of this Congress.
Sen. John Hickenlooper (D-CO) also recently argued in an interview with Marijuana Moment that the main barrier to getting the marijuana banking bill across the finish line is a lack of sufficient Republican support in the chamber. And he said if Trump is serious about seeing the reform he recently endorsed enacted, he needs to “bring us some Republican senators.”
Senate Banking Committee Chairman Sherrod Brown (D-OH) also recently reiterated the need to advance the SAFER Banking Act as a public safety imperative, promoting it in a video where he tours an Ohio cannabis business. In a recent interview with Marijuana Moment, he also said that “we don’t have enough Republicans, we don’t think.”
Many would like to see a Senate roll call vote on the bill before the end of this Congress—at the very least so members are forced to go on the record amid conflicting reports about whether the bill has enough support to reach the steep 60-vote threshold to advance to passage. But if it were to fail, some feel that setback could prove all the more damaging to its long-term prospects of success.
Separately Rep. Earl Blumenauer (D-OR), co-chair of the Congressional Cannabis Caucus, stated in a letter to House Speaker Mike Johnson (R-LA) that the cannabis banking bill is one example of a measure that should be brought to the floor imminently following Trump’s statement, as well as recent reporting about unearthed audio where former President Richard Nixon could be heard conceding that cannabis is “not particularly dangerous.”
“I would suggest moving policies that, instead of further dividing us, makes a difference for the American people, including for our veterans, law enforcement, small businesses and more,” stated the congressman, who is retiring at the end of this Congress. “It’s never too late to do the right thing.”
Whether Johnson would be willing to take the congressman’s advice remains to be seen, however. Prior to becoming speaker, Johnson consistently opposed cannabis reform, including on incremental issues like cannabis banking and making it easier to conduct scientific research on the plant.
Photograph via County of Los Angeles Public Health
This story was originally published by Marijuana Moment, which tracks the politics and policy of cannabis and drugs. Follow Marijuana Moment on X and Facebook, and sign up for its newsletter.
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