Currently, 40 states and the District of Columbia have medical marijuana programs, according to the National Conference of State Legislatures, and 24 of those (plus Washington, D.C.) allow for some type of adult-use or recreational sales.
In Ohio, state-licensed medical marijuana sales began in January 2019. Adult-use commenced in the state in August 2024 following the passage of an enacted statute by voters in November 2023.
As the group of chief state legal officers alludes to, current policies continue to restrict the extent to which some financial institutions will work with state-licensed cannabis enterprises.
Large banks with federal charters, in particular, tend to avoid the cannabis sector because of federal prohibitions, leaving state-chartered banks and credit unions as the institutions most willing to serve the marijuana industry.
The services those institutions offer tend to be minimal and rarely amount to more than providing deposit accounts, which can carry high fees due to the same legal prohibitions. Lending tends to come predominantly from private sources for the same reasons, which can lead to uniquely high interest rates.
Removing some of these restrictions and opening up banking access to the legal cannabis industry could therefore have a beneficial impact on both banks and borrowers by opening up access to more services, like payroll services and credit, including commercial loans and credit lines.
“It is increasingly critical to move cannabis commerce into the regulated banking system,” according to the letter from the attorneys general.
“In 2024, U.S. legal cannabis retail sales reached $30.1 billion, a 4.5% increase year-over-year. Nationwide, regulated cannabis businesses provided approximately 425,000 jobs in 2024,” the letter continues. “These businesses have a sizable economic impact, which is only expected to grow. Industry experts project that combined U.S. annual sales of regulated cannabis could reach $34 billion by the end of 2025.”
The letter also refers to some safety concerns due to cannabis retailers having to rely on cash transactions because of banking restrictions.
“As more states continue to consider and implement legalization efforts, the lack of access to America’s financial system by cannabis businesses – which is a direct result of federal banking law – presents a considerable safety issue for the public,” the group writes.
Stakeholders in the legal cannabis and financial services industries have been asking for this sort of legislation for many years. The SAFE Banking Act, which is effectively an earlier iteration of the SAFER Act, was first introduced in the spring of 2017.
“Despite the SAFE Banking Act passing in the US House of Representatives on seven previous occasions since its first passage in 2019, the SAFER Banking Act’s advancement through the Senate has caused quite a stir among not only cannabis and cannabis-related businesses, but also among banks, credit unions, insurers, lenders, and more — especially those that have, until now, elected not to serve the cannabis industry due to the risk that they could be prosecuted given federal restrictions on cannabis,” notes the American Bar Association.
This level of advocacy is familiar territory for Yost, as he was among the attorneys general who called for support of cannabis banking legislation in the past. Yost first came out in support of SAFE Banking in 2019.
Whatever the motivations for or against SAFER Banking, it is notable that Yost backs the legislation as a Republican attorney general in a deep-red state. Yost’s counterparts in Alabama and Arkansas, for example, did not sign the latest letter.
When Crain’s asked Yost to comment on his ongoing support for cannabis banking reforms, he reiterated the safety aspect as his primary concern in a statement shared by a spokesperson.
“Forcing legal marijuana businesses to deal in cash-only sales makes them a target for violent thieves looking to score easy money,” Yost said. “Granting these businesses access to regulated banks is a commonsense solution to the public-safety risk.”
