SACRAMENTO, Calif.–The California Department of Business Oversight has issued guidance designed to help state-chartered credit unions and banks, saying it will not take action against the institutions for serving legal, licensed cannabis companies in the state.
“Consumers, businesses, and law enforcement have long been concerned about the lack of banking access for cannabis‐related businesses,” the DBO stated. “Historically, the cannabis industry dealt primarily in cash, posing a significant public safety risk, among other problems. Since cannabis regulators began issuing licenses in 2018 following the passage of Proposition 64, state‐legal cannabis businesses have proliferated throughout California, but many licensed businesses have struggled to obtain basic banking services as financial institutions remain concerned about complying with federal law.”
Cannabis Challenges
The department said a growing number of state-chartered institutions have entered or are considering entering pilot programs for cannabis banking. “Regardless of whether banks and credit unions knowingly bank cannabis businesses, most inevitably encounter cannabis‐related compliance challenges,” the department said.
To assist state‐chartered institutions, the DBO said it developed cannabis banking guidance in the form of an extensive questionnaire that is intended to help financial institutions make appropriate risk assessments.
The questionnaire addresses financial institutions’ cannabis program governance and compliance with the federal Bank Secrecy Act (BSA), with a focus on the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) guidance on cannabis banking.
No Action to be Taken
“The DBO will not bring regulatory actions against state‐chartered banks or credit unions solely for establishing a banking relationship with licensed cannabis businesses; however, the DBO expects all financial institutions to comply with FinCEN’s BSA expectations, including the FinCEN guidance and priorities set forth in the Cole Memo, and identify, evaluate, and manage risks appropriately,” the DBO said.