Illegality And Risk
Banks are inherently risk averse. Thus, they tend to avoid working with retail businesses involved in industries like tobacco, firearms, pornography, etc. For the big financial institutions, cannabis fits into this type of high risk category.
Recreational marijuana is decriminalized in 18 states, but it is still illegal at the federal level. Therefore, transactions that involve cannabis sales will not be FDIC insured. Unsurprisingly, the Chase banks and Capital Ones of the world are unwilling to allow cannabis businesses to use credit cards for businesses that sell federally banned substances.
The House of Representatives passed the SAFE Banking Act in 2021, but the bill didn’t make it through the Senate. The act aims to reduce the liability for financial institutions to be penalized for serving marijuana related businesses. There are contrary opinions as to how this act would affect the trade as a whole. Some industry leaders argue that it would function more symbolically rather than making real tangible changes on the ground. Either way, it’s clear that even at the federal level, there is a noticeable push to further open up and decriminalize the industry.