The challenge with marijuana from a banking perspective is that while individual states have chosen to “legalize” it, whether for medical or recreational use, it is still considered a Schedule 1 drug and therefore illegal in the eyes of the Federal government. Under Federal law, anything derived from the marijuana plant is illegal as well as any proceeds from the sale of marijuana. Hemp on the other hand, may be excluded from the definition of marijuana at the Federal level if certain conditions are met. In any case, suspicious activity reports are still required to be filed for marijuana-related businesses under Federal law.
FinCEN put out guidance (FIN-2014-G001) in 2014 that is still relevant today. It states:
Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, a financial institution is required to file a SAR on activity involving a marijuana-related business (including those duly licensed under state law), in accordance with this guidance and FinCEN’s suspicious activity reporting requirements and related thresholds.
Kevin explains more in the video.
Published
2025/04/07
