Cannabis & Hemp Banking

The SDBA takes no position on the moral issues raised by legalizing marijuana. But with the passage of Amendment A and Initiated Measure 26 legalizing medical and recreational use of marijuana in South Dakota, the SDBA remains committed to supporting its member banks during this transition.

Federal and state laws continue to conflict regarding legality of cannabis use and sale. That also means that it remains illegal at the federal level for banks to serve businesses working directly and indirectly with the cannabis industry. Current proposals in both the U.S. Senate and the House seek to provide greater clarity and bridge the gap between state and federal law provide a solid starting point for discussion. 

Here is where things currently stand in South Dakota:

• The South Dakota Division of Banking issued medical cannabis guidance to South Dakota state-chartered banks which plan to provide financial services to marijuana-related businesses on Nov. 18, 2021. The memo does not cover recreational marijuana use in South Dakota. 
• The state of South Dakota's Medical Cannabis in South Dakota website answers questions and provides information about the state's medical cannabis program, which the voters of South Dakota passed in 2020.
• SDCL 51A-4-1.1 states that a bank may, directly or through subsidiaries, carry on the business of banking, pursuant to § 51A-4-1, with any person licensed in this state to engage in the business of industrial hemp or marijuana, or with any person engaging in legal business dealings with such licensee.
• Recreational marijuana remains illegal in South Dakota. On Nov. 24, 2021, the South Dakota Supreme Court ruled against a 2020 voter-approved ballot measure, Constitutional Amendment A, to legalize recreational marijuana in South Dakota. The Supreme Court's opinion upheld a Circuit Court decision that found Constitutional Amendment A violated a provision requiring amendments to the South Dakota Constitution encompass only one subject.

SDBA Webinar Recording:
Cannabis/Hemp Banking 101 Webinar

After a flurry of activity surrounding cannabis during the 2021 South Dakota Legislature, medical marijuana will become legal on July 1, 2021. Is your organization ready to bank the industry? The SDBA hosted the Cannabis/Hemp Banking 101 Webinar on Jan. 20-21, 2021. If you were not able to take part and are now looking for more information, the SDBA is extending the invitation to watch the recorded webinar. To see session details, click here. To purchase the recorded webinar for $275 and request the link to watch it, click here.

Cannabis Resources

• South Dakota Division of Banking Medical Cannabis Memo: Nov. 18, 2021
• CSBS Cannabis Job Aid: April 23, 2021
• FinCEN Marijuana Banking Update: June 30, 2020
• FinCEN Guidance--BSA Expectations Regarding Marijuana-Related Businesses: Feb. 14, 2014
• U.S. Deputy Attorney General Cole Memo--Guidance Regarding Marijuana Enforcement: Aug. 29, 2013

Hemp Resources

• South Dakota Division of Banking Industrial Hemp Memo: Feb. 9, 2021
• USDA Final Rule on Hemp Production: Jan. 19, 2021
• Fed Statement on Providing Financial Services to Customers Engaged in Hemp-Related Businesses: Dec. 3, 2019
• National Hemp Association 

Educational Resources

• American Bankers Association: The ABA provides a wealth of information on its cannabis banking webpage. 
• Colorado Bankers Association: Colorado was the first state in the country to legalize recreational cannabis use, and the Colorado Bankers Association has been on the forefront of the issue. Visit the CBA's cannabis webpage.
• OnCourse Learning: The SDBA’s webinar partner, OnCourse Learning, has a variety of on-demand webinars addressing the topic of marijuana. Visit www.bankwebinars.com, click on the search option and enter “marijuana”. 

The SDBA will continue to research this issue and keep you apprised of additional resources. Questions, contact the SDBA at 605.224.1653 or email SDBA President Karlton Adam at [email protected].