As the number of cannabis businesses serving New York’s adult-use market continues to grow, the number of banking opportunities for these businesses remains limited.
The New York Office of Cannabis Management (OCM) launched a cannabis banking directory at the bottom of its Social Economic and Equity (SEE) page on its website on Feb. 5. This directory allows industry licensees to easily identify reliable banking services, as there are now more than 300 licensed dispensaries open in the state.
However, the initial list is limited to 10 financial institutions: seven banks and three credit unions. This represents less than 1.5% of the roughly 315 banks and 380 credit unions that operate nearly 9,000 branches in New York, according to the state’s Department of Labor.
New York’s cannabis banking directory includes:
Southern Chautauqua Federal Credit Union – (Western New York)
Suffolk Credit Union – (Long Island)
Hanover Bank – (all regions)
Jonestown Bank & Trust Co. (JBT) – (all regions)
National Bank of Coxsackie – (Capital District; Central New York; Mid-Hudson; New York City; Southern Tier)
Dart Bank – (all regions)
Stearns Bank N.A. – (all regions)
AmeriCU Credit Union – (all regions)
Valley Bank – (all regions)
Ponce Bank – (Long Island; Mid-Hudson; New York City; Southern Tier)
“This directory, launched by our SEE Team, aims to streamline the connection between licensed cannabis businesses and supportive financial institutions,” OCM said in a news release. “This initiative is part of the office’s strategic efforts to reduce regulatory barriers and improve financial stability for cannabis businesses.
“The lack of accessible, compliant financial services has long been a challenge for licensed operators, complicating essential operations and transparency. The cannabis banking directory addresses these issues by bridging the gap between cannabis entrepreneurs and banks and credit unions that understand the unique needs of the industry.”
Specifically, the directory not only includes the list of banks and credit unions and which regions they serve—six serve the entire state—but also contact information and cannabis services offered at each financial institution.
Some of the services offered are more limited to business checking accounts, while others include full-service commercial banking, loans, savings accounts, money markets, and debit cards.
This comes at a time when the majority of U.S. financial institutions steer clear from the risks of banking cannabis businesses without federal legislation providing safe harbor for such activity, such as the Secure and Fair Enforcement (SAFE) Banking Act that passed the Democratic-controlled U.S. House seven times between 2019 and 2022 but never advanced in the Senate.
While the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued guidance in 2014 to clarify the Bank Secrecy Act’s (BSA) expectations for financial institutions seeking to provide services to cannabis-related businesses, the majority of institutions don’t bank cannabis companies because the hefty compliance standards aren’t worth the rewards.
For example, the BSA requires banks and credit unions to have procedures in place to assess the reputational risks of their clients to help ensure they are not aiding and abetting in unlawful behavior. Financial institutions taking on cannabis clients must file suspicious activity reports (SARs) with FinCEN to help prevent money laundering, tax evasion and other crimes.
Also, federal anti-money laundering laws prohibit depository institutions from handling money that comes directly from criminal activities, such as cannabis sales. Therefore, most financial institutions servicing cannabis clients are regional actors who are provided safe harbor by local governments and only offer limited services.
H/T: www.cannabisbusinesstimes.com
