Marijuana: Not Going to Bank It? Think Again!

By Meagan Norlund posted 07-27-2018 08:31

NEACH is thrilled to welcome Compliance Month guest blogger, Nancy E. Lake, CAMS-Audit, CAMS-FCI, Director of Compliance Anchor. Building on the information released in the previous blog "Banking Marijuana: Do You Go There?", Nancy lays out what steps you should take to address marijuana in your institution. If you would like more information, listen to our replay on-demand: Banking the Marijuana Industry in New England


Marijuana has been legalized in over 25 states, whether it be medicinal only or recreational aka adult (as proponents of it like to call it). Since marijuana is still illegal on the federal level many financial institutions want nothing to do with it. Some institutions mistakenly feel that if they have a statement in their BSA/AML policy to the effect they will not bank with any marijuana related businesses (MRBs), they are completely covered and there is nothing else they need to do.

However, it unfortunately is not that simple. For example, what if your largest commercial customer wants to build a strip mall and one of the stores in that mall will be a MRB selling products? Are you going to refuse to do that entire project? What if one of your most profitable businesses starts supplying some type of products to a marijuana business? Are you going to close that relationship? These are the questions to consider when determining what your financial institution will do.

So what should you do to address marijuana in your institution?

Step 1: Define MRB – What do you consider an MRB? Each state dictates what licenses are needed for each step from “Seed to Sale”. Pennsylvania has three types of licenses: processors, growers, and distributers. Other states could include a transporter license, a physician license, a testing license, etc. You should look up your state’s laws regarding marijuana on your state’s website and you can obtain information from The Marijuana Policy Project by selecting your state on this webpage:


Step 2: Consider a Tiering System – Not all types of MRBs are equal in their type of risk. You could consider a tiering system such as one of the following:

      Two Tier Option*

  • Tier 1 – Direct: These are businesses whose majority of revenue is from MRBs.
  • Tier 2 – Indirect: These are businesses whose revenues may come from MRBs but it is not their primary revenue stream. Determining a percentage of revenue you will or will not consider as “Indirect” would be wise.


      Three Tier Option*

  • Tier 1: These are businesses that “touch” marijuana from Seed to Sale. (Growers, processors, distributors, etc.)
  • Tier 2: These are businesses that generally do not “touch” marijuana, but they provide products and services to Tier 1 MRBs. The majority of their revenue comes from Tier 1 MRBs. (Suppliers, security firms, licensing consultants, etc.)
  • Tier 3: These are businesses that provide products and services to Tier 1 MRBs, but the majority of their revenue comes from other products and services. (Professional services, landlords, financial services, etc.)
  • Note: For more specific details on this tiering system, visit You must register to view the white paper on this topic, but registration is free.

*It is wise to determine the percentage of revenue you will or will not consider.

Step 3: Discuss Your Findings with the Board of Directors
– Since your Board of Directors is ultimately responsible for your BSA/AML program, you must give them the full picture and have them decide what your institution will do or not do.


Step 4: Update Your Policy and Procedures – Since there are so many gray areas to this type of business, your policies and procedures should detail exactly how you will handle various scenarios (New Accounts, current customers that expand into this business, loans, wires for investment, etc.).


Step 5: Train All Applicable Personnel – Your front line personnel from tellers to branch managers as well as loan officers and back officer personnel may all have conversations with customers on marijuana. They need to be aware of the policy and procedures your Board of Directors has approved for you institution so they can articulate it accurately and consistently to all customers or members of your institution.


About Nancy E. Lake, CAMS-Audit, CAMS-FCI 
Director of Compliance Anchor 

Nancy Lake has over 14 years of experience in the BSA/AML world. Nancy was CAMS certified in 2008, received her CAMS-Audit certification in 2013, and her CAMS-FCI certification in 2015. She has served as BSA Officer in multiple community banks where she successfully created and implemented the entire BSA program including one bank with a number of international MSBs. She has conducted bank wide BSA/AML training including Board of Director training. Nancy has experience working with and implementing several automated BSA/AML monitoring systems. 

Along with conducting monthly online training, Nancy speaks at numerous conferences throughout the year here in the U.S. and even overseas. For four years, she has been an instructor at the PA Bankers School of Banking. Nancy joined Atlantic Community Bankers Bank in 2012 to develop a new consulting division, Compliance Anchor. She is utilizing her BSA experience and 19 years as an educator to provide assistance to community banks in the areas of training, risk management, and the development of sound internal programs and best practices.