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What Triggers a Bank to Shut You Down?
Cannabis banks monitor ownership, deposits, METRC alignment, investor disclosures, and compliance risk. This page explains what specific actions trigger account review or termination.
What This Covers
- The most common reasons banks close cannabis accounts
- How monitoring turns into termination
- What banks review before shutting an account
- What usually happens when an account is closed
How Cannabis Banking Works
Cannabis remains federally illegal.
Banks that serve dispensaries operate under enhanced federal monitoring rules. They must continuously assess risk.
Banking relationships are conditional and subject to review.
Common Reasons Banks Close Accounts
1. Ownership or Control Changes Not Disclosed
Banks underwrite specific individuals and ownership structures.
If new owners, investors, or control persons are added without notice, the bank may classify this as elevated risk.
Example:
A 20% equity transfer occurs but the bank is not informed. During routine review, the discrepancy is identified. The account may be escalated.
2. Deposit Activity That Does Not Match Reported Sales
Banks compare:
- Deposit volume
- Expected revenue
- Business type
Large unexplained increases or inconsistencies can trigger review.
Example:
Monthly deposits average $140,000, then suddenly increase to $300,000 with no documentation provided.
3. Cash Patterns That Trigger AML Review
Under the Bank Secrecy Act, banks monitor:
- Structured deposits
- Repeated cash activity near reporting thresholds
- Rapid fluctuations in volume
These patterns may result in Suspicious Activity Reports (SARs).
4. Compliance or Regulatory Risk Signals
Banks may review:
- Public enforcement actions
- Regulatory violations
- Website or marketing claims suggesting federal violations
Perceived federal risk affects banking tolerance.
5. Sponsor Bank Exit
Sometimes the bank serving cannabis clients exits the sector entirely.
In these cases, multiple accounts may close at once regardless of individual store performance.
What Happens Before an Account Is Closed
Closures are often preceded by:
- Requests for documentation
- Enhanced monitoring
- Temporary restrictions
- Delays in processing
In some cases, termination is immediate.
What Happens When an Account Is Closed
- Deposits may be restricted
- Funds may be held temporarily
- Written notice is issued
- The business must find a new banking partner
Related Pages
- Why Did My Cannabis Bank Close My Account?
- What Is a Suspicious Activity Report (SAR)?
- Why Your POS Must Sync With Banking
