Cannabis Banking: Thoughts on FinCEN’s Latest Report

FinCEN drops new marijuana-related business banking data

The Financial Crimes Enforcement Network (FinCEN) is a bureau in the U.S. Department of Treasury. Last week, it published updated Marijuana Related Business (MRB) Metrics. The metrics are current through December 2024. The update was a little surprising, in the sense that FinCEN seemed to abandon its regular reporting of quarterly statistics back in 2022. It could be less surprising if you consider that these publications have always been FOIA-driven. Likely, FinCEN is just catching up on some compliance obligations.

The reporting obligations re: cannabis transactions seem pointless

The FinCEN metrics aggregate data in the form of “suspicious activity reports” from banks and credit unions, with respect to MRBs. As I’ve explained elsewhere:

The term “MRB” is used pervasively in cannabis banking, yet this term is not defined in the moldering 2014 Financial Crimes Enforcement Network “FinCEN” Guidance. It’s also not defined in the 2020 National Credit Union Administration Guidance on banking hemp-related business (which my law firm helped create) or the 2020 FinCEN Guidance on that related topic.

That snippet is two years old; however, the FinCEN Guidance is still moldering today. Consider that when it was published, only four U.S. states had voted to legalize recreational marijuana, and few, if any, financial institutions (“FIs”) were openly banking the industry. I know this because we set up the first credit union MRB program in Washington State, back in 2015. So maybe “moldering” is a euphemistic term for the FinCEN guidance…. Really, it’s old as dirt.

Anyway, the FinCEN Guidance gives directives to financial institutions that wish to bank MRBs, consistent with the Department of Justice’s 2014 Guidance Regarding Marijuana Related Federal Crimes. Specifically, FinCEN directed these financial institutions to detect, monitor and report specific transactions.

I’ve observed that:

The federal government has put FIs in a truly awkward position on MRBs. Bank Secrecy Act / Anti-Money Laundering (“BSA/AML”) compliance is a significant undertaking for FIs even outside the cannabis space. However, the FinCEN Guidance bumps things up a level by essentially deputizing FIs as federal law enforcement auditors. FinCEN requires FIs to monitor their MRB customers and members, including what they sell and to whom, and to watch for indicia of adverse information.

These FI obligations commence immediately and ensue perpetually. Specifically, the FI is required to file an initial [Suspicious Activity Report] within 30 days of onboarding an MRB. The FI must also file continuing SARs every 90 days after that, in addition to “marijuana limited”, “marijuana priority” and “marijuana termination” SAR filings, as needed, based on any number of events – or suspected events – set forth in the 2014 FinCEN Guidance. To say nothing of all the currency transaction reports (“CTRs”).

These filing obligations, and all of the software and training that goes with them, are frequently cited by FIs as a primary justification for the increased fees paid by MRBs. Law enforcement may hardly be acting on them, but FIs need to comply regardless.

I want to emphasize that last sentence today, because it becomes more relevant with each passing year. Law enforcement doesn’t appear to act on any of this MRB data, now or historically. That begs two, related questions for me: 1) Why are FIs still required to do this reporting, 11 years on?, and 2) Why hasn’t the FinCEN Guidance been updated, or rescinded?

Those questions are rhetorical, of course, unless you are Treasury official, in which case I really want to know! I’m guessing bank shareholders and credit union members would also like to know, because all of this paper pushing likely has no effect beyond downward pressure on margins. Cannabis businesses would definitely like to know, because it’s a big expense driver for them.

What the recent FinCEN data actually says

While we wait to hear back from someone at the Treasury, I should also take this opportunity to explain what FinCEN’s latest dump reveals. These reports have always been somewhat helpful as a snapshot of the MRB banking market, although that was not their intended purpose.

Here are three key takeaways, for me:

1. Roughly 80% of SARs are “marijuana limited” SARs, where the FI is not reporting suspicious activities. The FI is just saying “hey, FinCEN, here is a marijuana transaction!” And FinCEN is doing jack-all about it.
2. Roughly 13% of SARs are “marijuana termination” SARs. This is a filing that indicates an FI has de-banked someone. The FI is supposed to indicate in a narrative portion of the SAR exactly why the client or member has been de-banked (which they generally do, so that FinCEN can do jack-all about it). Further, if the FI becomes aware that the MRB is trying to move to another FI, it is supposed to consider alerting that second institution under the Patriot Act’s 314(b) voluntary information sharing. I’m not sure if anyone is doing that.
3. Overall, the number of SARs filed by FIs continues to rise, essentially doubling from 2015 to 2024. The number of FIs in the cannabis space has also risen, but far less dramatically. Still, we’re at 182 credit unions filing SARs in 2024, and 816 banks going into 2025. This lends credence to my long-standing argument that (basic) banking services are available to pretty much everyone in the state-level marijuana space who actually wants them, and the bigger problem is payment processing.

If you’d like further insight into this recent FinCEN drop, but don’t have the patience to wade through years of opaque data, I’d recommend this blog post by AML guru Jim Richards. Jim has been tracking this stuff diligently for years. In the meantime, for some related posts, check out the following:

• Cannabis Banking Today
• Cannabis Banking: All Businesses are Marijuana-Related Businesses
• How Important is the SAFE Banking Act, Anyway?
• A New Angle on Cannabis Banking Protections

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Leafly’s top 7 stash boxes of 2025

Find the best stash boxes of 2025. We reviewed popular stash boxes & chose the top picks for different needs and budgets.

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The best weed products of fall 2025

Get ready for cozy season with the best weed products of fall 2025. Find the flower & gummies we're giddy about & hot accessories.

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Webinar Replay | Cannabis Without Borders

If you missed our live session last week, the replay of Cannabis Without Borders: Global Policy & Market Trends is now available!

Watch the recording here: Harris Sliwoski LLP Webinars – Cannabis Without Borders

In this discussion, Harris Sliwoski attorneys Jason Adelstone and Vince Sliwoski delved into the rapidly changing world of international cannabis policy. From Europe’s regulatory frameworks to emerging markets in Africa and Latin America, they broke down where cannabis policy is advancing—and what it means for U.S. entrepreneurs and investors.

Key takeaways included:

• How decriminalization differs from true regulatory frameworks

• Investor advantages in international markets, including relief from 280E tax burdens

• The role of international drug treaties in shaping trade and compliance

• Opportunities for U.S. stakeholders as global medical markets expand

Whether you’re an investor, entrepreneur, or legal professional, this replay offers practical insights into navigating cannabis opportunities across borders.

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URB’N Dispensary: From pharmacist to cannabist

When Ramez Maxemous, a.k.a. Max, tells you he’s a pharmacist turned dispensary owner, you might raise an eyebrow. After all, it’s not every day someone trades prescription pads for pre-rolls. But for Max, who spent two decades behind the counter of a Newark pharmacy, the shift wasn’t about chasing a trend — it was about […]

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Federal Court Rejects “Illegality Defense” in Cannabis Trademark Case

The creative defense that failed

A trademark infringement defendant argued it couldn’t be sued in federal court because its cannabis business was engaged in illegal activity under federal law. This seemingly clever strategy fell flat in Colorado federal court, representing the latest decision in a growing trend of federal judges retaining cannabis-related litigation despite the centuries-old principle that courts lack jurisdiction over civil disputes involving illegal conduct.

The decision confirms that companies obtaining federal trademark registrations in “cannabis-adjacent” businesses are likely to succeed in protecting those marks against competitors operating without registrations—most often because they’re directly involved in cannabis commerce rather than merely adjacent to it.

The illegality doctrine and cannabis commerce

The illegality doctrine prohibits courts from providing a forum or granting remedies to parties who are breaking the law. The earliest reported application of the doctrine ex turpi causa is the 1725 case of Everett v. Williams, better known as The Highwayman’s Case, in which an English court dismissed a dispute between two thieves over division of robbery proceeds—and then turned both litigants over to the sheriff.

In the cannabis context, this doctrine has created significant barriers. Federal courts have historically dismissed cannabis-related commercial disputes, forcing litigants into state court systems. The challenge is compounded by federal trademark policy: the Patent and Trademark Office refuses trademark registrations for federally illegal goods and services, effectively excluding cannabis businesses from federal trademark protection for products with psychoactive amounts of THC.

Despite these barriers, federal judges are increasingly willing to retain cannabis-related cases, representing a pragmatic recognition of the complex legal landscape where state legalization conflicts with federal prohibition.

Case analysis: BBK Tobacco & Foods v. J&C Corp.

In BBK Tobacco & Foods LLP v. J&C Corp., U.S. Dist. Ct. Colo. Case No. 24-cv-01466 (Aug. 26, 2025), the defendant operated a cannabis business using the marks “Juicy” and “Raw” for THC-containing products. The plaintiff held federal trademark registrations for identical marks used on hemp rolling papers.

The defendant’s strategy

The defendant’s argument was creative: since federal law prohibits trademark protection for illegal business activities, and since the plaintiff couldn’t obtain registered trademark protection for THC-related goods, any infringement claim must fail as a matter of law. The defendant essentially argued that allowing the claim would improperly expand the plaintiff’s rights beyond what federal trademark law permits.

The court’s response

The federal judge made quick work of this defense, focusing on traditional trademark infringement analysis. First, the court noted that many of defendant’s products using the contested marks weren’t federally prohibited: smoking paraphernalia remains legal regardless of intended use.

More importantly, the court applied standard “likelihood of confusion” analysis. The judge emphasized: “Both companies here sell and market products on the smoking fringe between marijuana and tobacco and products which could easily and probably do cross over and back.” This overlap creates substantial likelihood of consumer confusion, particularly because consumers wouldn’t exercise great care when purchasing these products.

Strategic implications

This decision has significant implications for businesses in the cannabis ecosystem. Companies with federal trademark registrations for cannabis-adjacent products—hemp goods, smoking accessories, lifestyle brands—now have stronger grounds to protect those marks against direct cannabis competitors.

The decision suggests federal courts will look beyond strict illegality and focus on traditional trademark principles when marks and markets overlap substantially. This provides valuable protection for businesses that have invested in building federally protected brands in markets adjacent to federally illegal cannabis, such as hemp products.

Looking forward

This decision represents another step in the evolving landscape of cannabis-related federal litigation. Although the BBK decision is at the district court level, and does not bind other federal courts, it reflects a trend where judges are not reflexively dismissing civil claims involving cannabis—even where the remedy sought by the plaintiff involves recovery of money damages derived from federally illegal conduct.

Federal judges have acknowledged in a number of recent decisions the practical reality that medicinal or recreational marijuana is now allowed under state law in 34 states, and that the federal government is not actively enforcing the Controlled Substances Act (“CSA”) relating to cannabis. But the courts remain constrained by the CSA’s absolute prohibition on possession, manufacturing and distribution of high-THC cannabis, and the Act’s declaration that there is no property right to money given in “exchange for a controlled substance.” This has caused federal bankruptcy judges to deny many petitioners in the cannabis industry protection under the Bankruptcy Act. But if some aspect of a civil dispute involves federally legal conduct, or insolvency includes at least some funds or assets that are arguably untainted by violation of the CSA, the doors to the federal courthouse are more likely to be unlocked today than just a few years ago.

Timothy L. Alger is a litigator and of counsel at Harris Sliwoski LLP, and serves as an arbitrator and mediator through his ADR practice, Alger Resolutions. https://algeradr.com/

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Cannabis Licensing Moves Forward Across Minnesota

We have been on the Minnesota cannabis bandwagon for a while. Like a lot of programs, this one has been slow to roll out, and not without its share of hiccups. That said, it’s not New York, and I still firmly believe that Minnesota could be a great cannabis state. In this post, I’ll give a high-level rundown of where things sit in Minnesota cannabis.

Where are we with Minnesota cannabis licensing?

The Office of Cannabis Management (OCM) issued its first cannabis business license in June, and has preliminarily approved more than 1,000 applicants. This significant step forward came after OCM scrapped its pre-approval license lottery last December, in the face of various lawsuits. All applicants are now shuttled into a standard licensing process— although social equity-classified licenses still exist.

Approved applicants have 18 months to advance from preliminary approval to full licensure. Unlike some states, Minnesota doesn’t require applicants to secure a location before applying for a cannabis license. Thus, many of these newly approved businesses are currently attempting to tie down locations.

There are other considerations that approved applicants will also have to nail down during the pre-licensure period, such as local jurisdiction approvals, “final plans of record”, etc. OCM has a good overview page on the general licensing process here. If you’d like to see things condensed into a flow chart, go here.

When will we see a viable, regulated commercial market?

Originally, the state hoped to establish a commercial market in 2024. That ship has sailed, but things are moving forward. We should see some retail sales begin in the next few months, and most observers expect a gradual ramp-up in Q1 and Q2 of 2026. By this time next year, Minnesota should be humming from a broad consumer perspective, with additional licensees continuously onboarding and backfilling the program.

Note that Minnesota differs from many states in that it lacked a robust medical cannabis market prior to the OCM program rollout. For that reason, the state can’t just “flip a switch,” and pull in supply from existing, medical grows. (Interstate imports are also prohibited, of course.) If you’ve been following Minnesota cannabis news in the past month or so, you’ve probably seen stories like this one, where a handful of early, licensed retailers are stuck in limbo because the cupboards are bare. Hopefully a good number of cultivators arrive soon.

Eventually, the commercial market in Minnesota should be robust, with cannabis sales quickly gaining ground on the hemp products that are already, broadly on offer throughout the state. Most sellers will be private businesses licensed by OCM, but some tribes are already up and running, and, in an unusual twist, municipalities are even getting into the game.

Are there any key dates or deadlines upcoming?

Just one, or maybe two depending on how you figure. Both relate to licenses for low-potency hemp edibles (LPHEs), a category that the legislature addressed extensively this spring, and which many are excited about in Minnesota. (Note: delta-8 and delta-9 THC are the only intoxicating, hemp-derived cannabinoids currently allowed by rule.)

On October 1, OCM will begin accepting applications for LPHE licenses. Applicants will include LPHE retailers, LPHE manufacturers, and LPHE wholesalers. The LPHE licensing window is scheduled to close on October 31, 2025. Businesses registered before April 14, 2025 and those registered after June 1, 2025, are eligible to apply during the October licensing period.

Cities that sell these products through a municipal liquor store will also need to apply for a LPHE license. Ditto for out-of-state businesses that sell online to Minnesota consumers. For more information, OCM’s hemp-derived products webpage is a good resource.

Finally, please understand that unlike with cannabis, many of these hemp products are already on offer throughout the state of Minnesota, and have been for a while. (I took the picture gracing this article in a Duluth supermarket, a few weeks ago.) The October LPHE application window applies to existing operators who want to keep selling these products, as well as new market entrants.

Stay tuned in to Minnesota cannabis

We will keep you updated on Minnesota cannabis through the end of the year. Please reach out if you think we can help.

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