“Inside the Bank” is a series revealing how to build and maintain strong banking relationships, written by bankers for the cannabis industry. Part 1, “What Banks Wish Operators Understood,” is here. Part 2, “Scaling Your Cannabis Business? Why Your Bank is Watching Closely,” is here.
A dispensary operator we know had a good month. Sales were up, the team was growing, and the bank account that took weeks to open was humming at last.
Then the phone rang. The banker had a simple question: Deposits exceeded the sales recorded in the state tracking system, and the bank needed to understand why. Nothing was wrong. It turned out a cash count had been logged late. Nevertheless, the call landed as a surprise, because the dispensary operator believed the hard part was behind them.
It rarely is. Approval opens the bank account. The monthly review decides whether it stays open.
That review carries more weight now than it did a year ago, thanks to a change in federal status for some cannabis products.
In late April, marijuana grown, manufactured, and sold under a state medical license moved from Schedule I to Schedule III under the Controlled Substances Act. A Drug Enforcement Administration hearing to determine whether adult-use cannabis also should be rescheduled ended July 15; findings are expected later this year. The change brings new federal registration and recordkeeping questions for businesses handling state-regulated medical marijuana, along with new questions banks must be able to answer.
Because Section 280E applies to trafficking in Schedule I and II substances, the move to Schedule III also may change the federal tax treatment of qualifying medical-marijuana activity, although operators should await definitive guidance and consult their tax advisers.
Financial institutions have received no updated guidance from the Financial Crimes Enforcement Network (FinCEN) yet, so the monitoring duties that governed cannabis accounts last year still govern them today, and rescheduling has only raised what rides on them.
- Banks continue monitoring deposits, sales, licenses, ownership, adverse information, and suspicious activity after opening a cannabis account.
- Discrepancies are easier to resolve when operators maintain accurate records, correct errors promptly, and explain material changes before the bank discovers them.
- Clean financials and transparent compliance practices can strengthen banking relationships and improve an operator’s financing prospects.
- Medical marijuana’s move to Schedule III may create new documentation and monitoring questions, but federal banking guidance has not yet caught up.
What banks continue monitoring
Under FinCEN guidance, banks review a laundry list of things prior to opening an account. Although each institution structures its program differently, ongoing monitoring generally concentrates on four areas.
The first is the tie between sales and deposits. Money moving into the account must reconcile with legal, recorded sales. When deposits exceed what the point-of-sale and state systems show, the bank must determine what caused the difference. That single reconciliation is the clearest signal a bank has that a business is what it claims to be.
The second is the license. A bank confirms it is working with a licensed operator in good standing every cycle. A lapse, a suspension, or a change in status triggers immediate research.
The third is ownership. A change in ownership or control alters the basis on which the bank approved the relationship, because the bank onboarded the people as much as the company. New owners and signers mean new due diligence.
The fourth is the public record. Banks monitor public sources for adverse information and the red flags FinCEN identifies, from product diversion to undisclosed enforcement actions. What an operator leaves out, a bank often uncovers anyway. Many banks now run every transaction through automated review and assign an analyst to reconcile anything that looks “off,” which makes a clean, well-documented month a quieter one for the operator, too.
Rescheduling may add a fifth watch item for dual-license operators: distinguishing medical activity covered by the new federal framework from adult-use activity that remains in Schedule I. Banks may ask for records showing how sales, inventory, and reporting are allocated between the two. Some banks may ask operators to provide current DEA-registration information and clearer product-line records as the requirements take shape.
Banks look at both the error and the pattern
Operators often assume any mistake is fatal. That is not the standard banks use.
FinCEN instructs institutions to look for systematic failures: the repeated and uncorrected problems that signal either a weak compliance culture or an intent to mislead. A single late cash log or one-time reporting gap may be treated as an operational error, particularly when the operator explains and corrects it promptly. Repeated discrepancies, incomplete explanations, or failures to correct known problems present a more serious risk to the relationship.
The most common damage we see is quiet. Incomplete or incorrect sales-system data raises questions about reporting accuracy, inventory controls, and regulatory compliance. Inventory that is valued and tracked poorly distorts the financial statements on which banks rely. Neither problem looks dramatic in any single month, but both compound.
We wrote earlier in this series about the operational red flags that get accounts closed, and nearly all of them start as small, unaddressed habits.
What makes a cannabis operator lendable
The operators who clear these reviews without friction share a profile.
- Their financials are complete and, ideally, reviewed or audited.
- Their ownership and equity structure is clear.
- They have established a record of paying suppliers and tax authorities on time.
- Their compliance keeps their license secure.
- When they change something material in how they bank, they ask the question before they act instead of explaining it after.
That last habit is the one operators underrate. A banker would far rather field a question about a change order or a new location ahead of time than discover it during a review. As we noted when we wrote about growth as a risk trigger, the milestones an operator celebrates are often the moments a bank scrutinizes hardest. Bringing the bank in early turns a flag into a conversation.
Much of that discipline comes down to who keeps the books. The operators who present most cleanly tend to work with accountants who understand the quirks of cannabis inventory accounting and how they affect financial statements. When that expertise is not in-house, the strongest teams hire or outsource it rather than leave it to chance, because the back office is where the monthly review is won.
Why consistent financial records pay off
Loan pricing is built on risk. An operator that can demonstrate mature, documented, compliant operations is better positioned to qualify for financing and more favorable terms. An operator who cannot demonstrate those things ends up with fewer options and pays for the higher risk through a higher cost of capital or turns to predatory lending. The difference usually comes down to one thing: whether the business can prove what it claims.
Clean monthly books also change the character of the relationship itself. A bank that never has to wonder about an account becomes an ally, and often an advisor, through the stages of a company’s growth. A bank left chasing answers becomes a place to store cash until the trust runs out.
The banking relationships rescheduling may reward
Rescheduling is going to reshape this industry over the next few years, and the operators positioned to benefit are the ones building disciplined financial and compliance operations now. So many teams pour their energy into the plant, the product, and the sale, and leave the back office for later. Later is the review that decides your rate, your lender, and your options.
The industry is maturing, and banking is maturing with it. The relationships that will hold through that shift are built the same way every month: transparency on one side, trust on the other, and a shared record both sides can stand behind. Getting banked proves you can meet the standard once. Staying banked proves you can meet it every month. That is the reality that begins the day an account opens.
As vice president of banking and financial services at Green Check, Stacy Litke regularly advises banks, regulators, and cannabis operators on how to move from “trying to get banked” to building relationships that last. Drawing on decades of experience across community banking, fintech, and consulting, she translates complex regulatory expectations and evolving market conditions into clear, executable practices. She has worked with more than 130 financial institutions to stand up and refine cannabis banking programs under intense regulatory scrutiny. Prior to Green Check, she served as senior vice president of operations for MountainOne, a $900-million institution in Massachusetts, and as managing director for Northeastern Banking Services Group.
Ben Shreffler possesses more than a decade of experience in the financial services industry. He began his cannabis-banking career with Regent Bank in 2020 as a compliance analyst within the CRB Monitoring Team and currently leads the CRB Customer Success Team. (CRB is an acronym for cannabis-related businesses.) As leader of the client onboarding program, he focuses on developing program strategy, providing concierge-style banking services, and creating partnerships with clients.
