California’s banking institutions have a new set of guidelines to ensure they are not breaking any federal laws while dealing with cannabis businesses. The guidelines released by the state’s Department of Business Oversight include a list of risk-assessment questions for financial institutions to check off while serving cannabis businesses.
The cannabis industry continues to deal in cash for the most part in the absence of banking regulations.
The Department issued the guidance because “a growing number of state-chartered banks and credit unions are actively banking cannabis businesses or seriously considering proposals to do so,” Bret Ladine, a spokesperson for the Department of Business Oversight told Cannabis Wire. “It became apparent that guidance would be useful to those financial institutions by helping them understand what they should consider as they roll out their cannabis banking programs,” he added.
In the guidance dated October 2, Manuel P. Alvarez, commissioner of business oversight, said that that it is a part of the Department’s “continued effort to support banks and credit unions that serve cannabis‐related businesses in California.” At the same time, Alvarez reaffirmed that the banks need not fear regulatory actions from the state for providing services to cannabis businesses as long as they comply with federal banking regulations as outlined in the federal Bank Secrecy Act and the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) guidance on cannabis banking.
California’s guidance was developed using the Conference of State Bank Supervisors’ guidelines for bank examiners reviewing financial institutions servicing cannabis businesses, the Federal Financial Institutions Examination Council’s Bank Secrecy Act/Anti-Money Laundering examination manual, and input from the Department of Business Oversight’s own examiners, Ladine said.
The questionnaire asks financial institutions to consider if they have board-approved policies for handling cannabis accounts, if they are staying on top of state and federal cannabis laws and regulations, if they are taking adequate steps to ensure a cannabis business in licensed and compliant with regulations, and if they have the infrastructure and security measures to handle the cash inflow from cannabis businesses, among many other factors.
There are more than 10,000 licensed cannabis businesses in California, according to California Cannabis Portal, a state-run website. As Cannabis Wire recently covered, a bill to license and regulate cannabis limited charter banks and credit unions was withdrawn by its sponsor, State Senator Robert Hertzberg in September.
The United States House passed the SAFE Banking Act to facilitate cannabis banking and provide legal protections to financial institutions serving the cannabis industry in a historic vote on September 25. The bill has advanced to the Senate where it could face an uphill climb to passage.
