October 1, 2023

Climate for Banking for the Cannabis Industry in 2022

Cannabis developments are being closely monitored by the banking industry these days. According to Confia, a provider of financial services for cannabis businesses, changes are to be expected in the cannabis sector in the future: Several senators on both sides of the aisle are pushing for the inclusion of the SAFE Banking Act in a broader bill. This would also result in loosening some regulatory ties around a previously marginalized, heavily-regulated sector.


Better Regulation Is Imminent

Law-abiding cannabis companies have struggled to access financial services for the past decade because it has been illegal to use marijuana for recreational or medical purposes.

Depository institutions and credit card companies such as Visa and Mastercard cannot accept marijuana payments as long as marijuana remains illegal at the federal level. In today’s political climate, four legislative paths appear to be gaining steam.


As part of a broader legislative package currently being considered between the United States and China, a cross-party group of senators urged Congress to include the stalled SAFE Banking Act, allowing banks to provide financial services to cannabis firms. It would reduce cash-motivated crimes in communities if cannabis businesses operating legally and complying with state law were permitted to access financial services without federal reprisals. The U.S.-China trade bill may provide the opening the SAFE Banking Act needs to pass. The bill has passed the House six times but has not yet reached a vote in the Senate.

Cannabis Industry

Fintech Alternative

There are growing legal and regulatory risks associated with cannabis banking, but many U.S. banks are moving into the sector. Cannabis businesses face additional compliance challenges when assessing and monitoring their compliance with state laws. Some banks don’t find that business model feasible. Others claim there is money to be made. Financial institutions can participate in cannabis banking now as federal prohibitions remain in place while the SAFE Banking Act sits in the Senate.

Accessing Cannabis Banking

With the acquisition of Century Bancorp, which has $500 million in deposits, Needham Bank has edged out its rivals, who are waiting for federal regulations to change before entering the cannabis banking market. Having studied the cannabis industry for two years before making the move, Needham CEO Joe Campanelli is opposed to the cash-based nature of the industry. Although Campanelli understands that some banks are hesitant to enter the industry from a legal perspective, he has no hesitations.

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the Cannabis Industry

Business Acquisition

With nearly 600 accounts across 20 states, Safe Harbor Financial’s cannabis banking business processed $4 billion in transactions last year. Northern Lights Acquisition will purchase the business for $185 million in cash and stock. As a result of Northern Lights’ acquisition, Safe Harbor can remain the premier cannabis financial services provider. Their goal is to become a premier shop for cannabis businesses across the USA.

What Can Banks Do?

As marijuana becomes mainstream and legalization expands, financial institutions and the cannabis industry will continue to face these challenges. Keeping these businesses from becoming money laundering targets and assisting them in operating successfully are two critical roles that banks play.

It is already evident that legal marijuana isn’t just a smoke show. It is apparent that this industry’s strength is not a facade. By providing legal marijuana businesses with access to critical financial services, banks can help this new industry gain legitimacy. In addition, banks should ensure that these new clients comply with the law. Following these tips will make it easier for the legalized cannabis industry to begin.

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