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Dear Pot Lawyer,

Why is it so hard for canna-businesses to get a bank account?

In one of my recent columns, I mentioned that banking is still one of the biggest obstacles for Oregon canna-businesses, but I didn’t go into much detail about why.

Unsurprisingly, the story begins with federal law. The official federal policy is still that cannabis has no accepted medical use and is as dangerous as heroin, LSD, and ecstasy. However, as states began to legalize medical use en masse, the Department of Justice under President Obama found itself in a bind: How can the federal policy be that cannabis has no accepted medical use when state after state was officially recognizing the exact opposite? This led to the infamous Cole Memo, which provided guidance to federal prosecutors for cannabis enforcement. The memo outlined the DOJ’s enforcement priorities, such as preventing access to minors, and preventing violence and illegal activity.

States have been able (thus far) to protect their local industry by focusing on these priorities when crafting recreational/adult-use regulatory frameworks. So all is well, unless you are a large banking institution that is uncomfortable with uncertainty and subject to financial crime statutes like the Banking Secrecy Act (BSA). The BSA requires financial institutions to keep a close eye on their customers, and report suspicious activity to a federal agency called FinCEN. The Cole Memo didn’t address this problem.

On Valentine’s Day in 2014, FinCEN released a formal guidance that allows a bank to offer accounts to known canna-businesses as long as the bank complies with an expensive special set of procedures. In brief, the bank has to learn the ins and outs of your business in order to make an independent assessment of whether your business is compliant with the Cole Memo principles. This requires new systems and new employees trained in understanding cannabis businesses. All of that takes money, and it’s understandable that the banks ask customers to carry those costs.

These high barriers to cannabis banking have limited the number of institutions willing to enter into the arena. Until recently, only one institution in Oregon was accepting cannabis clients. Fortunately, there is a new player on the scene. As explained by Carmella Houston, the Vice President of Business Services of Salal Credit Union, “Salal Credit Union has provided safe and sound banking to the Washington cannabis industry for three years, and we are expanding our program to Oregon. Salal understands the unique needs of the cannabis industry and offers cash pick-up and delivery services via an armored car service along with full service banking to its business members.” Salal is already offering bank accounts and even institutional lending in certain circumstances. This should expand access throughout Oregon, and ease this particular burden on the industry.