Cannabis banking — keeping the account open, not finding one

Cannabis is federally illegal under the CSA. Banks that serve the industry rely on FinCEN’s 2014 guidance + the Cole memorandum framework — both informal, neither codified. Every cannabis-friendly bank operates under heightened BSA / AML scrutiny: every account triggers a SAR-Marijuana Limited filing on every transaction by default. The bank’s compliance department reviews the operator’s pattern quarterly. If the pattern doesn’t match clean retail-cannabis activity, the account gets reviewed → restricted → closed. The operator finds out via a 30-day notice.

• **Currency Transaction Report (CTR).** 31 USC §5313. Bank files a CTR on any cash transaction over $10,000 in a single business day. Not optional, not avoidable, not a problem on its own — but the FinCEN database keeps every CTR for 5 years.
• **Suspicious Activity Report (SAR).** 31 USC §5318(g). Bank files a SAR when a transaction LOOKS like an attempt to evade reporting, structuring, or fraud. SARs are filed silently — you’re not notified, and you can’t legally be told one was filed.
• **Structuring (the trap).** Splitting a $12,000 cash deposit into two $5,500 deposits to avoid the $10,000 CTR threshold IS A FEDERAL FELONY (31 USC §5324) — even if the underlying cash is legitimate. The crime is the splitting, not the source. Repeat offense pattern = SAR filed = account closure within the quarter.
• **SAR-Marijuana Limited (the operator’s baseline).** Every cannabis-friendly bank files this on every cannabis customer’s every transaction. It’s a tracking SAR, not a punitive SAR. As long as your pattern stays inside the ‘Limited’ framework, you’re fine.
• **SAR-Marijuana Priority (the bad one).** Filed when the operator’s pattern shows red flags beyond standard cannabis activity. SAR-Priority = bank’s compliance team starts the account-review process. Operator gets 30 days notice + the account closes.

• **Cash-to-receipt ratio outlier.** Retail cannabis is cash-heavy by federal-illegality (no card networks). But 100% cash with zero electronic receipts looks weird. Some debit-rail volume (Aeropay / CanPay / hi-tech ACH options) — even a small percentage — normalizes the pattern.
• **Deposit frequency mismatch.** Open 7 days a week, depositing once a week = $X cash sitting in the safe between deposits. BSA flag: operator may be commingling cash from non-cannabis sources. Daily or every-other-day deposits show clean rhythm.
• **Round-number deposits.** $5,000.00 / $7,500.00 / $9,500.00 deposits with no variance. Real till counts have variance — $4,872.43, $5,103.18. Always-round = looks like the operator is reverse-engineering the deposit to a target number, which is the structuring tell.
• **Just-under-$10K deposits.** Repeated $9,000 / $9,500 / $9,800 deposits = textbook structuring red flag. Even if your daily till is genuinely just under $10K, deposit it ALL — don’t hold back $200 to stay under. The CTR is fine; the structure is the problem.
• **Vendor-payment patterns.** Paying vendors via check on a cannabis-friendly bank is normal. Paying vendors via cash + the cash leaves the safe in unmarked envelopes = vendor-side cash-management trouble for whoever you’re paying, which loops back to your account.
• **Employee labor as % of receipts way off.** Cannabis retail labor runs 8-15% of receipts. Outliers either direction (3% = ghost employees, 25% = phantom hires) flag.
• **Customer count vs. transaction count mismatch.** 200 transactions / day on a 60-customer / day shop = high average basket; possible. 60 transactions / day on a 200-customer shop = same customer being charged separately for things that should be one transaction; possible structuring at the till level.
• **Sudden velocity shifts.** $30k/day average → $80k/day for a week → back to $30k. Could be a holiday, could be price-bump, could be a one-time event. BSA team will ask. Have the explanation ready.

Most account closures we’ve seen trace back to one of three deposit-pattern failures. Get these right and the rest of the discipline gets easier.

1. 1**Deposit daily — same time, same teller, same branch.** ‘Same time’ means within a 60-minute window, not to the minute. The teller develops familiarity with your business; routine = trust signal. The bank’s anti-structuring algorithm looks for deposit-time variance as a feature.
2. 2**Deposit the FULL till count.** Whatever the till closeout says — that’s the deposit. Don’t hold back ‘a few hundred’ for the next day’s starting cash; pull next-day’s starting cash from a separate withdrawal. Keeps the deposit-side and the operating-cash-side decoupled in the bank’s view.
3. 3**Deposit slip = the till closeout report.** Print the closeout, attach to the deposit slip. The bank’s record + your record reconcile. If a CTR-or-SAR question lands later, the paper trail is already perfect.
4. 4**Cash-on-hand cap.** Whatever your insurance policy covers (most cannabis-shop policies cap at $10-25k) — that’s your in-safe maximum. Above the cap → forced deposit. Forced deposits are fine; they show external discipline (insurance) driving the pattern.
5. 5**Variance review > $10/day.** Per Kat’s till-count policy in our shops. Variance over $10 between till closeout and deposit count = manager-level review. Flagged variances logged. The variance log itself is a document the bank wants to see at quarterly review (shows discipline).

• **Respond within 24 hours.** ‘We’ll get you whatever you need; let’s schedule a call this week.’ Stalling = SAR escalation.
• **Don’t volunteer information beyond what they ask.** Same WSLCB-inspection rule applies. Stay narrow; answer what they asked; don’t walk them through unrelated business operations.
• **Bring the data.** Quarterly review prep = 4-pager with: receipts by day for the period / cash-vs-electronic split / employee count + labor cost / vendor-payment ledger / variance log / any operational changes (price increase, new SKU, etc).
• **Loop in legal if the question is about a specific transaction.** ‘Why did you deposit $X on date Y’ is fine to answer factually. ‘Why is your pattern shifting’ is fine. ‘Here’s the SAR we filed; would you like to comment’ — that’s a question you do NOT answer without counsel. Banks aren’t supposed to disclose SARs but it happens.
• **Have a contingency bank.** The 30-day account-closure notice is the bank’s standard. Two options: (a) you’re already in conversations with a backup; you switch in 2 weeks and stay operational. (b) You’re scrambling at day 25 with no backup; you’re cash-only out-of-bank for 60-90 days. Always have option (a) in motion.