This Is What You Need to Know About Cannabis Banking Laws in 2021

In the past years, it has been challenging for the cannabis industry to develop due to legal matters. Moreover, it was hard for them to obtain financial services.

In June 2020, marijuana-related businesses were under the aid of 695 banks and credit unions.

The Financial Crimes Enforcement Network, also known as (FinCEN), is a bureau of the U.S. Department of the Treasury. According to one of the reports, the North American legal cannabis market was worth $16 billion in 2020.

In light of the report, Green Entrepreneur, discussed the upgraded Cannabis banking laws in 2021.

Problems of Cash

Carrying cash around in your pocket can create problems. Generally, Cannabis clients deal in cash, but because it’s prone to theft, it creates definite hurdles for the consumers. 

Moreover, business operators are stuck with immense sums of cash on hand. All these problems occur due to the lack of banking options. Let alone the risks of theft and fraud.

Banking Institutions

Additionally, for the less careful businesses, it can increase the tax-dodging issues. So, banking institutions can help provide a firmer financial structure. Also, they can help avoid cash management problems.

Effects of Weed Legalization

In numerous states of America, cannabis is legal for medical and adult-use. Moreover, as the numbers of cannabis businesses increase similarly, the need for banks will also increase.

Since banking options aren’t currently available, it creates an unfriendly environment for the consumers. Generally, three factors can have direct impacts on banking choices for the marijuana industry. They are listed below: 

  1. Modifications to the law in California
  2. Expanded guidance for credit unions
  3. Democratic poll sweep

Recently an assembly Bill 1525 was signed into law. The Governor of California, Gavin Newsom, recently approved it. The 1525 bill has two significant objectives.

Safe Harboring in California

Banking institutions in California have a safe harbor while doing business.

It is legally allowed to do business with cannabis companies. It means that they are not committing any crime in the eyes of the law of California.


Moreover, professional accounting services and licensed armored car services also fall in the same category. They are all legally free to serve cannabis clients.

Also, working with cannabis operators will not lead banks or other entities to state penalties.

Financial Assessments

Assessment for financial institutions, loans, and other services is easy for the Cannabis business. They can all easily yield with federal reporting requirements.

Licensed cannabis businesses are to sign a waiver according to the bill. It permits the state, regulatory authorities, and local licensing to share information. It includes an application, license, financial, and other regulatory info.


The state of California is hoping that this bill will help ease the burden of the banks. Moreover, it will ensure that federal requirements are fulfilled. 

Also, according to the operators’ agreement, the state is sharing licensing information.

Banking Challenge

There is one challenge that a cannabis business excessively faces. Banks generally take a percentage of each deposit, or they may charge you for a monthly account fee.

However, in AB 1525, there is no mention of the fees. There is hope that by removing these challenges, the industry can flourish. Also, different banking options will be available.

It will lead the industry to a more competitive environment.

Controlled Substances Act

According to the federal government’s Controlled Substances Act, marijuana is a Schedule I drug. 

However, the California banks do not have protection against federal criminal prosecution. Despite this fact, banks are in favor of providing cannabis companies with financial services.

The cannabis industry has flourished during the pandemic, according to a report. However, there was a decline in 2020 in the banks working with marijuana businesses.

Credit Unions

All this happened due to credit unions, which saw a slow increase in hemp clients. Detail guidance was released by the National Credit Union Administrations to help work in hemp-related businesses. 

It helps the currently serving credit unions by boosting their comfort level. It also guides on how to deal with any complexity or risks.

National Credit Union Administration

The NCUA has upped their game. They are trying to educate the people on how to service the industry. Furthermore, they want to teach financial institutions how to deal with fraught and legal challenges.

A hemp business should consider a bank that is an FDIC insured credit union.


The SAFE Act provides security for banks and credit unions. Especially those that give services to legal cannabis-related businesses.

Moreover, cannabis industry service providers can also get safety from it. In late 2019 the Act passed Congress.


It stands for The Strengthening the Tenth Amendment Through Entrusting States. It diminishes the fear of federal intervention. Also, it helps in eliminating the threat of federal trafficking prosecution.

The STATES Act will help the banks in learning if the cannabis customers obey state law. However, it can be an obstacle to a financial institution without an in-house expert or workers.


The Marijuana Opportunity Reinvestment and Expungement Act is the boldest cannabis legislation. It would help end any criminal activities related to cannabis.

Moreover, it would also expunge any previous cannabis arrests, convictions, or charges. With the help of the MORE Act, cannabis will not be a part of controlled substances.

Furthermore, it helps to make sure there is no discrimination against people who use cannabis. It also outlines how to get social justice, economic development, and cannabis criminal justice reform.


As the cannabis industry keeps rising to the top, there is a need for banking reform. Also, without a doubt, both operators are willing to make the change. They have faced financial problems for a long time. Now the financial business wants to bring in people who have money without the fear of federal prosecution.

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