Adapted from a Financial Crimes Enforcement Network report; Chart: Axios Visuals
More banks and credit unions are offering checking and savings accounts, wire transfer services, and even loans to marijuana companies — and, so far, regulators have been watchful but accepting.
What's going on: Since marijuana is considered a criminal substance under federal law, banks that handle marijuana-linked money risk of being charged with money laundering. So they charge high fees for the privilege.
The Treasury Department's Financial Crimes Enforcement Network — FinCEN — tracks banks that serve what it calls MRBs (marijuana-related businesses).
Banks that do serve pot businesses — after completing due diligence to make sure a company isn't involved in illicit activity —must keep tabs on every single transaction and report customer activity to regulators.
Banks pass on the cost of all that paperwork — in theory, charging these customers whatever they want.
If a regulator says the bank isn't being thorough enough, fines can be levied.
Even so, there are still few options for marijuana companies that need a place to store cash, pay bills and so forth.
What we're hearing: "A cannabis operator can count on [paying] several thousand dollars a month in banking fees. It'd probably be in the hundreds of dollars for [a non-cannabis] company," Chris Call, CEO of North Bay Credit Union, which offers banking services for marijuana companies, tells Axios.
What to watch: The SAFE Banking Act — a bill in Congress that would shield banks from federal penalties for serving marijuana business customers — is gaining momentum. But in the meantime, states are trying to take matters into their own hands.
Nevada is testing a Venmo-like system that would allow marijuana businesses to transfer money.
California lawmakers are mulling a bill that would create state-sponsored, marijuana-friendly banks.
Higher taxes: Not only do marijuana companies pay higher banking fees, the illegality of marijuana means they pay more in federal taxes.
One tax regulation prevents most cannabis companies from deducting the business expenses that non-marijuana companies can.
One study found that the effective tax rate of MRBs was more than double the rate paid by “similarly situated” non-marijuana businesses.
Bonus: Cannabis companies don’t get a charitable deduction for any gifts they make. And charities are wary about accepting money from weed-affiliated businesses.
