Cannabis banking in 2021: Changes in Washington will change your credit union

An ever increasing number of credit unions around the country have been responsibly banking cannabis businesses (specifically marijuana) for years by following the compliance framework outlined in FinCEN’s 2014 guidance “BSA Expectations Regarding Marijuana-Related Businesses”. However, in the 35 states (plus DC and Puerto Rico) that have legalized marijuana, some credit unions remain unwilling to bank cannabis businesses, FinCEN guidance notwithstanding, until it becomes federally legal. Under the previous administration there was little expectation of significant federal marijuana reform due to publicly expressed anti-marijuana sentiment among ranking Republicans, but now that the Democrats have taken control of both the executive and legislative branches there’s a very good chance this will change in 2021.

Broadly speaking we can expect one or more of the following four things to happen:

• Full Legalization – marijuana is made fully legal for sale and consumption in all 50 states, DC, Puerto Rico, and US territories.
• Decriminalization / Descheduling – marijuana would be removed from the schedule of controlled substances but states would retain the right to regulate and restrict its use as they see fit.
• Rescheduling – currently healthcare providers cannot prescribe marijuana because it is a Schedule I controlled substance, so to drop it to a less restrictive tier would effectively legalize medical marijuana (but not adult-use).
• Specific protections for financial institutions – the Secure and Fair Enforcement (SAFE) Banking Act would prohibit federal regulators from discouraging financial institutions from offering services to state-legal marijuana businesses

To get a sense of what’s most likely to happen in 2021 we’ll look at where several key Biden administration officials stand on federal marijuana reform:

• President Joe Biden – Biden’s current position is that “we should just study [marijuana] and decriminalize it.”
• Vice-President Kamala Harris – During the vice-presidential debate in 2020 Harris promised that she would work with Biden to “decriminalize marijuana and […] expunge the records of those who have been convicted of marijuana.” In the Senate she introduced the Marijuana Opportunity Reinvestment and Expungement (MORE) Act to decriminalize cannabis and co-sponsored the SAFE Banking Act.
• Xavier Becerra, Department of Health and Human Services – Becerra, California’s Attorney General, has publicly advocated for federal marijuana reform. In 2017 he said, “we’ve realized it’s better to regulate than criminalize marijuana use” and in 2018 he co-signed a letter sent by 17 Attorneys General to Congress urging them to pass the SAFE Banking Act.
• Senate Majority Leader Chuck Schumer – Schumer introduced the Marijuana Freedom and Opportunity Act to decriminalize marijuana and was quoted in 2020 as saying, “My commitment is that if I am leader, I am going to do everything I can to put the Marijuana Freedom and Opportunity Act on the floor of the Senate. The odds are very high it will pass.”

Taking those positions into account, it seems highly likely we’ll see marijuana decriminalized and/or protections put in place to protect financial institutions that bank marijuana businesses. It’s likely versions of the MORE and SAFE Banking Acts will be passed by Congress now that Democrats control both the House and the Senate, but should those efforts stall out it’s been suggested that Biden is not opposed to decriminalizing marijuana by executive order.

So what does this mean for credit unions that aren’t banking marijuana businesses? First off, any of the four options on the table should remove concerns that banking marijuana will imperil the credit union’s charter or reputation. Second, and this is something that we’ve heard recently from examiners in states with legal programs, “not banking marijuana” really isn’t an option anymore. That doesn’t mean you have to open accounts for marijuana businesses, but you do need to be able to show your examiners that you can identify them and understand your reporting obligations.

If you’re not banking these businesses now, or you’re in a state that has yet to legalize marijuana, you need to prepare for what’s coming down the pike. Start building a cannabis banking program now, based on the 2014 FinCEN guidance, so that you’re not caught off guard when things change in 2021.