Banking marijuana-related businesses

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Question:

Our bank has taken a "no" stand on banking MRBs, however we recognize the "Tier III" category identifies some types of businesses that may provide services to a Tier I MRB. An example would be a container manufacturing company that may sell containers to a Tier I MRB as only a small percentage of their business. Does anyone use an allowable percentage of revenue to determine if this is within your risk tolerance? Also, is there an allowable threshold for direct sales of cannabis products in the states that have legalized use? (For instance, a liquor store or distributor that sells beverages with THC, since that is becoming so common).

Answer:

Welcome to the interesting world of cannabis banking!

The Tier method you are describing is one approach to cannabis risk (proposed by ACAMs in 2016), while another one that has gained popularity in the industry is the "Indirect vs Direct" approach (first used by the SBA in 2018).

Under the 3 tier method, a Tier III business is low risk, with any revenue / activity being incidental to Tier I activity. No state licensing is required.
Under the Indirect / Direct approach, an indirect entity is one that derives its gross revenue from sales to Direct marijuana businesses. No state licensing is required, and it is also usually seen as lower risk.

There are no regulations mandating how you handle such businesses, and it is completely up to your institution's risk tolerance to determine if you wish to bank them, and if so, how much you want to handle them. Is the risk based on the Federal illegality of marijuana, and thereby guilt-by-association, or is the issue more of a financial risk if the indirect business derives too much of its income from marijuana, thereby placing too many eggs in a potentially precarious basket? The risk appetite of each institution will vary, with some institutions banking indirect businesses without limit, while others place metric markers to be tracked and managed.

As for direct sales thresholds, this will be entirely up to State law. Typically, the levels of of THC must be below .3% to be a legal CBD or Hemp product, while anything higher than that is considered Cannabis, subject to full regulation and sales only by licensed state entities. Here is a helpful resource: https://www.csbs.org/sites/default/files/2025-03/MRB%20Job%20Aid%20March...