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The 4 Relationships Your Cannabis Banking Program Needs

Mission-driven financial institutions are keenly aware of their role in the community and the importance of building strong local connections.

As we prepare to gather around the Thanksgiving table with friends and family, we are reminded of the importance of community and our relationships with those around us. Mission-driven financial institutions, in particular, are keenly aware of their role in the community and the importance of building strong local connections.

When it comes to building a cannabis banking program, relationships become all the more important. To guard against the risks of this industry, banks and credit unions should be prepared to invest time, energy, and resources in establishing and maintaining strong relationships with key stakeholders. The following groups are particularly important:

The Community

While reputational risk continues to decline as the overall acceptance of cannabis among the general population increases, there will be individuals who oppose this market. Financial institutions serving or considering serving cannabis-related businesses (CRBs) should be prepared to address concerns raised by members of the community. Being open to questions and engaging in conversation provides the opportunity to explain how cannabis banking ties into their mission of supporting local entrepreneurs and improving public safety. Having a solid justification for why the financial institution is serving the market, grounded in its service to the community, is critical to mitigating reputational risk and establishing strong relationships with the communities in which they operate.

Cannabis-Related Businesses

By their very nature, community banks and credit unions typically have strong relationships with their customers. However, unlike traditional banking relationships where customers are generally not exposed to the compliance activities at the financial institution, CRBs must be active participants in their own compliance. This requires frequent interaction between the operator and the financial institution to ensure full transparency. As a result, banks and credit unions must develop the systems, applications, and processes to vet and onboard potential customers and access critical account and transaction data while delivering a positive customer experience. Establishing a point person or a small team dedicated to servicing CRBs can enable bankers to become trusted partners while supporting the compliance requirements of the financial institution.

Board of Directors

Many financial institutions encounter the misperception that the cannabis industry can’t be banked. Sometimes, resistance to this line of business can come from the Board itself. While much of the execution of a cannabis banking program happens at the management level, board members must have a firm understanding of the industry. This includes being educated about the risks and how the institution is set up to meet its compliance obligations. This knowledge will allow the Board to evaluate the program, establish clear policies, and provide informed guidance about their risk appetite and how far they are willing to go.


Maintaining open and transparent relationships with regulators is a cornerstone of cannabis banking. The most successful cannabis bankers build working relationships with their regulators, so there is no ambiguity about what the financial institution is doing and how it is approaching the industry. While regulators will not endorse a cannabis banking program, they can offer valuable feedback on their expectations and any concerns they may have.

Cultivating these and other stakeholder relationships is a critical aspect of every cannabis banking program. Engaging with experts in the compliance, audit, and BSA/AML space who understand the cannabis industry and operational requirements can be instrumental in ensuring banks and credit unions are set up for success to serve the needs of CRBs and the community at large.

This article originally appeared in CU Insight on November 18, 2021


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