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Marijuana, related & CBD businesses
1. How many financial institutions (FIs) are involved in this growing market?
2. For those FIs that are onboarding these types of businesses, what is the range of or average fee assessed?
3. What is the number of FTEs suggested to manage the risk?
4. What is the regulatory stance or are they waiting on the Senate to pass the SAFE Banking Act of 2019?Mary Beth Guard’s responses are below:
How many financial institutions are involved in this growing market? At last count, according to FinCEN, there were 493 banks and 140 credit unions providing banking services to Marijuana-Related Businesses. That count is based upon SARs filed through March 31, 2019. (The number is growing. If you go back to SARs filed as of September 30., 2018, you find there were only 375 banks and 111 credit unions banking marijuana-related businesses.
For those FIs that are onboarding these types of businesses, what is the range of or average fee assessed? Fees assessed per marijuana business account can range from $500 to $2500+ per month, depending upon the size, the volume of activity, the number of locations the business has. Basically, the more work the FI has to go to, the higher the fees. Some financial institutions may base the fees on a percentage of gross revenue generated by the business each month. I do not favor that approach because it makes the FI appear to be a “partner” in the business, benefitting from the upside.
What is the number of FTEs suggested to manage the risk? That will depend upon the number of MRB accounts the institution has. Two would be the absolute minimum, in my opinion.
What is the regulatory stance, or are they waiting on the Senate to pass the SAFE Banking Act of 2019? The federal bank regulators have not formally taken positions on this issue. On the other hand, none of them have initiated enforcement actions against institutions banking MRBs. The big concern is whether the institution is adequately staffed and has the necessary expertise.
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