The Illinois State Treasurer’s Office is searching for a bank to provide cash processing of cannabis tax payments. The deadline for proposals is June 4.
Springfield, Ill.-based INB, National Association, currently provides cash processing services to the state under two contracts that expire in November, said Christopher Flynn, deputy general counsel and chief procurement officer for Illinois Treasurer Michael Frerichs.
Among the 27 responsibilities under the initial four-year contract, the selected bank would:
- Open and maintain treasury office accounts for adult use and medical cannabis services
- Accept and process tax payments from the cannabis industry at any branch location
- Accept incoming wire transfers
- Accept outgoing wire transfers initiated by the treasurer
- Accept ACH debits based on company identification numbers
The bank would also provide the treasurer’s office with controls and abilities to maintain the accounts and access electronic data for daily transaction and other reports, according to the Request for Proposals.
The detailed proposals are due by 1 p.m., CDT, June 4. The treasurer’s office will notify the awardee and begin contract negotiations the week of July 14.
An INB executive who leads the bank’s Treasury Sales division did not respond to questions asking if it will submit a proposal to keep the contract.
Banking cannabis taxes is difficult
Illinois is a top cannabis-selling state, with over $2 billion in sales in 2024 generating more than $490 million in tax revenue, according to a Feb. 6 press release from Gov. J.B. Pritzker. For FY 2025 through April, the Illinois Department of Revenue has collected $232.2 million in the Cannabis Regulation Fund. The Cannabis Regulation Fund includes adult-use taxes, license fees, and other fees under the Cannabis Regulation and Tax Act.
Banking cannabis-related revenue is not just difficult for businesses, it’s also been a challenge for state governments because of anti-money laundering rules required by FinCEN.
Treasurer Frerichs told CRB Monitor News two years ago that “compliance costs and continued regulatory uncertainty make it more difficult to procure” bank contracts. At the time, Illinois also contracted with JP Morgan and Wells Fargo for banking services.
Frerichs has worked with the National Association of State Treasurers to advocate for improved banking services in legal cannabis states, including supporting the SAFER Act in Congress. The treasurer’s office website has a page dedicated to cannabis banking.
“Today, we have a banking crisis because rules built decades ago have not kept up with changes in law and acceptable behavior,” Frerichs says on the site. “Working together, we can use common sense to bring safety and security to this legal industry and everyone who lives in Illinois.”
