What is Cannabis Banking?

Cannabis banking is a term referring to financial institutions that provide banking services to cannabis-related businesses (CRBs), as well as the businesses and individuals that directly or indirectly support them. Cannabis-related businesses are classified into three tiers:

  1. Tier 1 - Businesses that touch the cannabis plant
    (Examples: Nurseries, Delivery, Dispensaries)
  2. Tier 2 - Businesses that primarily serve Tier 1
    (Examples: Security Firm, Lighting, Industry Associations)
  3. Tier 3 - Businesses with CRB clients
    (Examples: Attorneys, Accountants, Landlords)

While some financial institutions in the country serve the cannabis industry, many don't because of the high risk associated with this type of account. With the growth trajectory of legal cannabis sales forecasted to exceed $40 billion by 20251, this new business line has the potential to be quite lucrative for the financial institutions willing to take on the risk. 

But what is the real risk?

The biggest concern for banks or credit unions with or considering cannabis customers is money laundering. Today, the cannabis industry operates predominantly in cash, making it an ideal environment for washing dirty money. Since banks and credit unions are liable for all funds entering the institution, they tend to err on the side of safety by avoiding these high-risk accounts altogether.  

Common Money Laundering Scheme


Understanding the risk associated with cannabis banking is the first step in solving the problem of an underserved industry that desperately (and rightfully) needs financial services. Deposit capabilities, payroll, lending opportunities, credit options, and other banking services that are standard requirements for almost all operating businesses, are difficult to find and typically more expensive to attain for CRBs. Cannabis businesses, and the individuals they employ and serve, deserve access to affordable and reliable banking products and services. With the right cannabis banking compliance solution, any financial institution should be able to safely and profitably serve this high-risk business community.

With medical cannabis legal in 36 states (plus Washington D.C.) and adult use in 18 (plus Washington D.C.), there will undoubtedly be an increase in legitimate cannabis-related businesses. These businesses will look to the financial institutions in their communities to provide them with the banking tools needed to help them build successful and profitable companies. 

To learn more about NatureTrak and our compliance and risk management solution for financial institutions banking cannabis, please visit www.naturetrak.com or download our white paper, A New Standard: BSA/AML Risk Management of Cannabis Banking, by clicking the button below:

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1New Frontier Data. (2021). The Global Cannabis Report: Growth & Trends Through 2025. https://newfrontierdata.com/global-cannabis/