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.
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These federal restrictions on banking have led to many cannabis companies, and sometimes their employees, getting debanked or blocked from accessing banking in the first place.
According to Aaron Klein, a senior fellow in economic studies at the Brookings Institution, U.S. financial institutions filed more than 2.5 million SARs in 2023, roughly 10-fold what they filed in 2003. Banks claim that each SAR filing requires more than 20 hours of work.
However, Klein questioned whether SARs fulfill their purpose when he testified as one of four witnesses during the U.S. Senate Banking Committee’s hearing on debanking held Feb. 5.
“Why are we forcing the banks to continue to file all of these things?” Klein questioned. “If you’re running a state-licensed cannabis business, you should be treated like other businesses.”
While the hearing was supposed to focus on debanking for “federally legal” businesses and their employees, at the direction of Chairman Tim Scott, R-S.C., Democratic and Republican senators on the committee did not stray from discussing the cannabis industry’s access to banking.
While talking more broadly about America’s debanking issues, Sen. Katie Britt, R-Ala., asked one of the hearing’s witnesses, “What are the real-world impacts to small legally operating businesses if they are denied access to our financial system?”
Mike Ring, the president, CEO and co-founder of Old Glory Bank, which launched in April 2023 in Oklahoma as a market solution to debanking, responded.
“Well, if you can’t make payments, and if you can’t bank, then you can’t exist in America,” Ring said. “It’s happened in crypto. It’s happened in the Second Amendment space. It’s happened among conservative causes. You can’t exist without banking.”
Although the cannabis industry continues to “exist” in America, many small businesses have struggled to thrive in the space.
In 2024, just 27.3% of U.S. cannabis businesses were profitable, according to Whitney Economics’ U.S. Cannabis Business Conditions Survey report. In comparison, 65.3% of all small businesses in the U.S. are profitable.
Banking is one of the various issues holding the cannabis industry back.
The state launched a cannabis banking directory for the industry, but the list of financial institutions is limited. Read More
