Independent Banker - July 2024 - 25

that help the bank monitor these types
of businesses. "
The current state of
cannabis regulation
What the SAFER Banking Act would
require is something woefully lacking
in the CRB banking world: updated,
more detailed, and more consistent
regulatory guidance. The FinCEN
guidance of 2014 remains the only
official guidance for banks.
" It's very bare bones guidance, "
says Erin Moffet, policy director for
the Cannabis Financial Industry
Group, an educational and advocacy
organization. Moffet notes federal
regulators are prevented from
publicly recognizing banks they
believe are doing a good job banking
CRBs. Regulators don't publish best
practices among financial institutions
or consult with each other to establish
consistent regulations.
" There's no detailed compliance
advice and no unified playbook, "
Moffet says. " SAFER would allow for
more communication between state
regulators and financial institutions.
The ability to have best practices and
uniform standards would be huge. "
Serving CRBs nationwide
Despite regulatory uncertainty, the
CRB industry continues to grow.
As more states enact some level
" You have to have BSA-minded
people that will dig in and
do those investigations [for
cannabis-related businesses]. "
-ASHLEY HESS, JONESTOWN BANK & TRUST CO.
of legalization of marijuana and
cannabis-24 states have legalized
recreational use as of February 2024
and another 14 states allow it for
medical use-CRBs have expanded
across state lines. Their bankers
have followed.
Regent Bank now banks CRBs
nationwide. " The need came from
our current client base who were
expanding into new markets, "
explains Shreffler. " We wanted to
be able to help bank their business
under one umbrella. Wherever there's
a legal program, we can bank into
that market. "
BIG STAT
15K
The number of cannabis
dispensaries in the U.S.
Source: Pew Research Center
JBT has also expanded across
state lines as its customer base has
grown. " We bank businesses with
some connection to our bank or our
market, " Peters reports. " There's a lot
of consolidation happening with larger
companies buying other companies
that had the original license. These
are multiple state operators [MSOs]
that may have facilities in four or eight
states. If they're our customers, we
want to bank them. "
Easing compliance
with technology
Expanding across state lines does
multiply compliance concerns. Banks
need the right staff and technology to
handle the increased requirements.
" It's an investment to get started, "
says Ashley Hess, VP, cannabis
banking manager at JBT. " We have
a staff of five people that only do
cannabis-related business. You have
to have BSA-minded people that will
dig in and do those investigations. "
Hess adds that JBT has also
pursued strong technology partners.
" Automation is the way to go, " she
says. " That's what examiners are
looking at also. "
A good fintech partner facilitates
compliance across multiple
jurisdictions. " Not all states are
created equal in terms of the veracity
of their licensing and enforcement
of cannabis regulations, " observes
Tony Repanich, president and CEO of
Shield Compliance, a cannabis banking
compliance platform for financial
institutions. " In states that have great
oversight, bankers can rely on activities
of the state. In those markets where
there are inherent weaknesses, bankers
have to fill in those gaps. "
Shield Compliance maintains
updated information on states' rules
and has shared best practices with
regulators as to what's working in
other states. " Part of the reason
there is good availability of banking
within a state is because the banks
feel comfortable with what the state is
doing, " Repanich says.
Ironically, the extensive monitoring
and investigation associated with
the CRB accounts often reinforce a
bank's comfort with the business.
independentbanker.org // 25
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Independent Banker - July 2024

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