What Should Bank Boards Know Before Banking Cannabis?
More than a decade into state‑level legalization, federal policy remains stuck in neutral, forcing institutions to navigate a line of business that is both legal under many state regimes and effectively criminalized under federal law. Congress has yet to pass the SAFER Banking Act, and proposed rescheduling of marijuana to Schedule III would ease some burdens without truly resolving the core banking dilemma. In that vacuum, boards must decide whether to build the governance, technology and staffing needed to serve a growing, tax‑paying industry that Washington still treats as a legal gray zone.
As cannabis legalization spreads from coast to coast, more banks are deciding whether it is time to serve an industry that has long operated at the margins of the U.S. financial system. That means reevaluating long‑standing risk assumptions, modernizing BSA/AML programs and, in many cases, partnering with specialized fintech providers.
Two professionals on the front lines of this shift — Stacy Litke, advisor to financial institutions on cannabis banking through her Bonita Springs, Florida, firm Green Check Verified, Inc. and Mike Wilson, CEO of RiverBank in Spokane, Wash. — say the business is becoming more mainstream. But both caution that it will remain a high‑risk, high‑touch line of business that only works when governance and technology are built in from the start.
Despite growing interest from financial institutions, the legal framework governing cannabis banking remains unresolved in Washington.
Congress has repeatedly attempted to pass legislation that would give banks explicit legal protection for serving state-licensed cannabis businesses. The latest effort, the Secure and Fair Enforcement Regulation (SAFER) Banking Act, has again stalled despite bipartisan support. The bill would prohibit federal banking regulators from penalizing institutions solely for providing financial services to legitimate cannabis businesses operating under state law.
The American Bar Association noted that measure cleared the Senate Banking Committee in 2023 with bipartisan backing but has not yet received a full vote in either chamber of Congress. Advocates say the legislation would allow more banks to serve the industry without fear of federal enforcement action.
Without such legislation, marijuana remains illegal under federal law, leaving banks to rely on a patchwork of regulatory guidance from the Financial Crimes Enforcement Network (FinCEN) and Department of Justice enforcement policies. As noted by Reuters, that uncertainty continues to deter many larger financial institutions from entering the sector, leaving the industry heavily dependent on smaller banks and credit unions willing to build specialized compliance programs.
From Outlier to Underbanked Niche
Litke says the industry has moved beyond its former status as a compliance outlier. The more pressing concern, she argues, is that a legal, tax‑paying sector remains chronically underbanked.
“There is pretty universal agreement now that cannabis businesses need access to the U.S. banking system,” she says. “The question for banks is no longer, ‘Should this industry have accounts?’ It is, ‘Can we serve them in a way that meets regulatory expectations and fits our risk appetite?’”
Litke points out that cannabis remains illegal at the federal level, which means banks must still rely on guidance from the Financial Crimes Enforcement Network (FinCEN) and Department of Justice policy while following state licensing regimes. That legal tension has not gone away, she says, but examiners have become more familiar with the risk profile.
“Regulators are looking for deliberate decisions, not blanket prohibitions,” she explains. “If a bank can show that it understands the risks, has a clear policy and is resourcing its BSA/AML program appropriately, it is more likely to get a fair hearing in an exam.”
Wilson agrees that the industry is still underbanked, even as more institutions have quietly entered the space. “It is a higher‑risk line of business. That is agreed upon throughout the banking industry,” he says. “But so long as you are monitoring it and administering it in an adequately risk‑adjusted way, then the banking services can be — and should be — provided to these businesses who are legally operating in the vast majority of states these days.”
Even with legalization expanding across much of the country, the scale of the banking gap remains significant. According to data released by FinCEN, just over 800 U.S. financial institutions report actively serving cannabis-related businesses — a small fraction of the nation’s roughly 9,000 banks and credit unions. Regulators have emphasized that institutions may bank cannabis companies if they follow strict due-diligence and reporting requirements, including the filing of specialized Suspicious Activity Reports.
Legal Risk vs. Operational Reality
From Litke’s perspective, the biggest risks in cannabis banking are no longer solely legal or reputational; they are operational and supervisory.
“The real exposure is in the controls,” she says. “Can you prove you know your customer, understand their licensing, and monitor their activity well enough to file accurate, timely SARs? That is where banks get into trouble, not simply because they chose to open accounts for cannabis.”
She often advises clients to reframe cannabis as a “compliance‑first recurring revenue line,” not a quick fee play. That means budgeting for additional BSA/AML staff, upgrading monitoring technology and documenting how the bank’s risk appetite for cannabis fits into its enterprise‑wide risk assessment.
Wilson echoes that view from the banker’s side. He says RiverBank quickly learned that cannabis accounts would be more resource‑intensive than traditional small‑business relationships.
“There’s certainly more reporting just from a SAR filing perspective on these accounts than there typically is with non‑cannabis‑related accounts,” Wilson says. “It is quite frankly more time‑intensive and resource‑intensive than non‑cannabis‑related customers.”
To keep up, RiverBank invested in automated monitoring tools before it went live with its cannabis program. “Getting those programs to really help us from an efficiency perspective was integral to success,” Wilson says.
Boardroom Questions and Governance
Both voices agree that prudent cannabis banking must start in the boardroom. Litke says one of the most important early steps is explicit board‑level acknowledgement that cannabis is either in or out of scope.
“You need a risk appetite statement that says, in plain language, whether and how the institution is going to serve this industry,” she says. “From there, you build a cannabis‑related business policy that ties into existing BSA/AML, sanctions and third‑party risk frameworks.”
She notes that examiners increasingly expect to see cannabis referenced in enterprise risk assessments, board packets, and policy documents. “If it only shows up in a product memo, that’s a red flag,” she says.
At RiverBank, the board treats cannabis as part of a broader strategy to partner with fintechs. “From an oversight perspective, we see this as a fintech partner,” Wilson says. “We have a fintech committee within our board of directors who look at potential program partners, look at that from an underwriting perspective, how the program would function, and then we have outside legal resources, of course, who help in that underwriting and due diligence phase for the partner.”
Policy followed that governance structure. Wilson says RiverBank adopted both a cannabis‑related business policy and an overall fintech policy that “serves as our blueprint of how we go about these relationships.”
A Community Bank’s Fintech Play
RiverBank, founded in 2006, is a roughly $300 million‑asset community bank that focuses on business customers and operates from a single location in downtown Spokane. Its business model has always emphasized digital delivery over branch expansion.
“We do almost exclusively business banking,” Wilson says. “We were founded under a slightly different idea in that we would focus on a niche of business banking and that we would skip the idea of branch banking expansion. So, we only have one location.”
As the bank considered how a community institution could thrive in the future, it began researching fintech partnerships — what Wilson describes as BaaS — and investigating cannabis banking at the same time.
“We were exploring the idea of considering cannabis banking to local companies,” he says. “We really said to ourselves, if we are going to explore a cannabis banking business line, we want to make sure that we are working with a third‑party vendor who can provide us with the expertise to run that in the most compliant way.”
That search led RiverBank to Green Check, a fintech that provides compliance tools and banking connectivity for cannabis businesses. “Green Check was already working with community banks around the country in providing cannabis banking compliance services,” Wilson says. “In our conversations, we said, we’ve been looking at fintech partnerships, which we would describe as BaaS, and they said, we would really like to talk to you about that.”
Under the eventual partnership, cannabis businesses interact with Green Check’s digital platform to apply, enroll, and open checking accounts. “Ultimately, that checking account opens on RiverBank’s ledger,” Wilson says. “It goes through shared onboarding, KYC, BSA, AML, all those good things that a bank is required to do. But ultimately, the user experience is through the Green Check platform.”
The result, he says, is that RiverBank can open deposit accounts for cannabis‑related businesses nationwide, even though its traditional customer base is largely within 100 miles of Spokane.
Monitoring Sales Data and Offboarding
Litke says this kind of technology‑enabled model is becoming more common as banks look for ways to demonstrate that they understand exactly what money is entering the system.
“Sales data has become critical,” she says. “If you can tie deposits back to licensed activity and actual sales, you are in a much stronger position when examiners ask how you know those dollars are legitimate.”
Wilson credits Green Check with providing that visibility. “They can monitor sales data,” he says. “They know exactly what happened within a cannabis transaction, from when it was grown by a grower, then to a processor, to when it is sold at a dispensary, and throughout its distribution lifecycle. The obligation if you are going to operate within that space from a banking perspective is that you can show to our internal resources, but certainly our external resources from a regulatory perspective, that we know exactly what those dollars are that entered our bank and therefore entered the banking system, and that they’re legitimate and that they can be traced.”
RiverBank also prepared for the downside: businesses that fail or fall out of compliance. As a bank that does “95 percent plus” small‑business banking, Wilson says, it is accustomed to companies starting, stopping, and closing for a variety of reasons.
“We have an offboarding policy, plan, kind of workflow that we follow that’s similar to our non-cannabis‑related businesses,” he says. “We will proactively work with Green Check to see, is this company providing us and providing Green Check exactly what they are supposed to, and we have just really a no‑tolerance stance. If they are missing what we ask for, we close the account.”
Lessons for Other “Controversial” Lines of Business
Litke argues that cannabis is a useful test case for other sectors that may be politically or socially sensitive but legally permissible, from certain types of gaming to high‑risk money services.
“The lesson is not unique to cannabis,” she says. “It is about how you approach any higher‑risk customer segment: clear board decisions, strong policies, the right partners and enough staffing to do the work.”
Wilson reaches a similar conclusion. “You have to make a decision: Is it in the bank’s best interest to hire and scale up and bring that overall administration of the program in‑house and do it on your own?” he asks. “Or are there partners out there that are better suited, that are dealing with whatever the sector is in a higher volume that are a more appropriate partnership as you go into it? In our case, we determined that ultimately a partnership and multiple vendors to help administer the program was the better move.”
Looking Ahead: More Options, Higher Expectations
Both Litke and Wilson expect cannabis banking to expand, even if federal reform continues to lag state legalization. Litke believes more institutions will step in as they see peers operate successful programs and as competitive pressure grows. But she warns that expectations will rise along with participation.
“Early movers sometimes got credit just for showing up,” she says. “Now, supervisors know what a mature cannabis program looks like. They are going to ask tougher questions about systems, staffing, and oversight.”
Wilson, for his part, expects RiverBank’s partnership with Green Check to continue to grow, and he sees additional fintech alliances on the horizon.
“I believe that our partnership with Green Check will continue to grow,” he says. “As more and more businesses realize that they can have a digital‑first banking relationship, they’re going to choose something like Green Check’s accounts. We believe that we will have other fintech partners in the future, whether they are cannabis or not. We will expand that fintech future of RiverBank, and we welcome that. We think we’re very well positioned to capitalize on that.”
Federal policy developments could eventually reshape the landscape. In addition to the stalled SAFER Banking Act, federal regulators are also evaluating a proposal to move marijuana from Schedule I to Schedule III under the Controlled Substances Act. As reported by the Raleigh, N.C., CPA and advisory firm Cherry Bekaert, the change would ease certain tax burdens on cannabis businesses but would not fully resolve banking access issues because the industry would remain federally illegal without congressional action.
For midcareer bankers working their way up the ladder, the evolution of cannabis banking offers a case study in how strategy, governance and technology intersect. In a world where Congress cannot deliver clarity and rescheduling stops short of full legitimacy, boardrooms — not Capitol Hill — will determine whether this line of business is an automatic “no,” a thoughtful “yes,” or a missed strategic opportunity.
