California financial institution’s merger may pressure FDIC to rule on cannabis banking


A really attention-grabbing story printed by S&P. The banks actions will imply any person on the FDIC must make some severe choices that might result in a variety of ramifications for the cannabis sector not solely in CA but in addition nationwide.

A small California financial institution’s merger software may pressure the FDIC to take a firmer stand on marijuana banking.

On June 14, Oakland, Calif.-based Summit Bancshares Inc. obtained phrase from the Federal Deposit Insurance coverage Corp.’s San Francisco Regional Workplace that the regulator would advocate denial of its software for merger with Faciam Holdings Inc., as a result of financial institution’s marketing strategy to service marijuana-related companies, or MRBs, in accordance with a shareholder letter. Marijuana is authorized for each leisure and medicinal functions in California, however it’s nonetheless unlawful underneath federal legislation.

The financial institution plans to proceed with the merger anyway.

“The Board of Summit has determined to not withdraw the applying and to require the FDIC to go on file to disclaim the applying,” Board Chair Shirley Nelson wrote within the letter.

The financial institution’s board believes the matter is necessary sufficient to be determined by FDIC management, mentioned Gary Findley, a lawyer with Gary Steven Findley & Associates and authorized counsel for the financial institution. “It’s a coverage choice,” he mentioned in an interview.

That is the primary time the FDIC has been requested to immediately grant or deny a financial institution entry to cannabis banking, in accordance with Findley.

Present steerage from the Monetary Crimes Enforcement Community, or FinCEN, requires banks to file a suspicious exercise report each time an MRB opens an account and each 90 days thereafter, even when marijuana is authorized underneath state legislation.

Banks that present companies to MRBs could possibly be prosecuted for money-laundering or drug trafficking underneath federal legal guidelines, in accordance with Morgan Fox, media relations director for the Nationwide Hashish Business Affiliation, a commerce group for marijuana companies.

In accordance with a short printed by the Nationwide Affiliation of Federally-Insured Credit score Unions, FinCEN information confirmed that 633 depository establishments supplied banking companies to MRBs as of March 31. This is a rise of 147 depositories from FinCEN’s September 2018 information.

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