Providing financial services to legal marijuana businesses in the U.S. has proven a challenging, complicated venture for the nation’s banks. As more financial institutions (FIs) warm up to the idea, one bank in Maryland is taking significant steps to address cannabis companies’ FinServ challenges.
Reports in The Washington Post this week profiled Severn Savings Bank, a community bank in the state that is said to be providing services to legal marijuana businesses. The FI is owned by Severn Bancorp and is based in Annapolis. Two marijuana dispensaries and two cannabis growers told reporters at the publication that they have now opened bank accounts with Severn Savings.
But challenges remain. The dispensaries and growers told The Washington Post that they have to pay significant fees, noting that they cannot write checks or take out loans from the bank. Reports said Severn Savings does not want to risk running afoul of federal law by providing services like these to cannabis companies.
That’s the biggest concern for financial institutions across the country that may be operating in states in which marijuana is legal, but remains illegal under federal law. But as the federal government moves to gradually clarify the rules for financial service providers surrounding this industry, more FIs have been eager to get involved.
Data from the Financial Crimes Enforcement Network show that the number of financial services players operating in the cannabis market has increased from 340 last January to 400 last September, according to Forbes reports released earlier this week.
Jake Van Wingerden, head of a Maryland-based marijuana trade association and of licensed grower SunMed Growers, told The Washington Post that Severn Savings Bank was eager to work with industry players.
“That bank was very quick out of the gate saying, ‘I want to work with the industry,’” he said. “Everybody I talk to has accounts at Severn ... I don’t know how else we would do business.”