Treasury and Investment Management

Allowing State Authorized Cannabis Businesses to Access the Federal Banking System


A growing proportion of US States have legalized the use of cannabis products for medical and recreational purposes.  However, under federal law, cannabis is considered an illegal controlled substance. Due to the federal classification of cannabis, legitimate cannabis businesses conducting commerce that is statutorily protected by their own State may not have access to banking accounts, checking accounts, credit cards, and other financial services where there is oversight from federal banking regulators. 

As with other legitimate businesses who must submit tax and fee payments, State and local governments with established cannabis taxes and fees must also receive those payments from legitimate cannabis entities doing business in their state.  As such, many governmental entities must handle a large intake of cash payments, which causes concerns related to the safety of the individuals and entities involved due to the transfer of large sums of cash as well as the enhanced challenge of auditing receipts.  Further, governments may not be receiving the full amount of taxes and fees due from these businesses as they cannot access traditional banking platforms to make these payments.

GFOA Position

GFOA supports federal legislation allowing for financial institutions regulated by the federal banking system to handle funds from State sanctioned cannabis-related businesses and individuals. Individuals and businesses conducting lawful commerce within their own State should not be penalized under the federal banking regulations or other federal laws aside from necessary protections to prevent fraud and illegal activity such as money laundering.  These legislative efforts would help state and local governments properly and more securely receive revenues due to them from businesses and individuals.

  • Publication date: September 2019