What are the Three SAR Types for Cannabis: Limited, Priority, Termination?
How banks classify cannabis SARs—and what each label must include.
FinCEN’s 2014 guidance created three SAR labels for marijuana-related businesses (MRBs): Marijuana Limited, Marijuana Priority, and Marijuana Termination. Banks must file SARs on all MRB activity, then use the appropriate label, include required narrative details, follow continuing-activity timing, and leverage 314(b) information-sharing where applicable. This article explains each label and cites multiple authorities so you’re not relying on a single source.
Short Answer
Banks must file a SAR on every cannabis-related relationship or transaction and classify it as Marijuana Limited (state-compliant; no Cole-priority issues), Marijuana Priority (implicates Cole priorities or violates state law), or Marijuana Termination (relationship ended to protect the AML program). The SAR rule at 31 CFR §1020.320 governs filing, and FFIEC guidance covers narrative quality and continuing-activity timing. FinCEN also encourages 314(b) information-sharing when terminating accounts. eCFR FFIEC BSA/AML+1 FinCEN.gov
Why “all MRB activity” requires a SAR
FinCEN states the SAR obligation “is unaffected by any state law that legalizes marijuana-related activity.” Because federal law still prohibits marijuana, MRB transactions “generally involve funds derived from illegal activity”—so a SAR is required. See also the underlying SAR regulation for banks at 31 CFR §1020.320 (what/where/when to file). eCFR
Cole Memo linkage. The three labels align with DOJ’s Cole Memo enforcement priorities (e.g., sales to minors, diversion across state lines, violence, etc.). Justice.gov
“Marijuana Limited” SAR—when the customer appears compliant
File Marijuana Limited when CDD indicates the MRB does not implicate a Cole priority or violate state law. Keep the narrative brief: identify parties/addresses, state you’re filing solely due to marijuana involvement, and note no additional suspicious activity. Use the term “MARIJUANA LIMITED.” For ongoing, unchanged activity, follow FinCEN’s existing continuing-activity timing. The FFIEC Manual explains narrative quality standards and 90-day/120-day continuing-SAR timing practices. FFIEC BSA/AML+1
“Marijuana Priority” SAR—when risk indicators are present
File Marijuana Priority when activity implicates a Cole priority or violates state law. The narrative should include identifying details, which enforcement priorities appear implicated, and dates/amounts of the relevant transactions. Use “MARIJUANA PRIORITY.” FinCEN also lists red flags (e.g., revenue far above peers, structured deposits, third-party cash, commingling) that help distinguish Priority SARs.
“Marijuana Termination” SAR—when you exit the relationship
When you terminate an MRB relationship to maintain an effective AML program, file a SAR and note the basis for termination. Use “MARIJUANA TERMINATION.” FinCEN urges voluntary Section 314(b) information-sharing (if eligible) to alert the next bank to potential illegal activity; see FinCEN’s 314(b) Fact Sheet for details. FinCEN.gov+1
Practical timing & quality checkpoints (examiner-ready)
When to file: follow the SAR timing rule (generally 30 days from initial detection; up to 60 days if suspect not yet identified). eCFR
Continuing activity: refresh approximately every 90 days (120-day filing window) when activity continues unchanged. FFIEC BSA/AML
Narrative quality: FFIEC Appendix L outlines what examiners expect (clear explanation of why it’s suspicious; don’t just say “see attachment”). FFIEC BSA/AML+1
Final Answer
Use the three-label system to make cannabis SARs decision-useful for law enforcement:
Marijuana Limited for state-compliant activity, minimal narrative.
Marijuana Priority when Cole priorities or state violations are implicated; provide detailed facts.
Marijuana Termination when you exit the relationship; consider 314(b) outreach.
Backstop your filings with 31 CFR §1020.320 and FFIEC narrative/continuing-SAR guidance. eCFRFFIEC BSA/AML+1
Glossary of Terms
SAR (Suspicious Activity Report): Mandatory report to FinCEN when transactions may involve unlawful activity; see 31 CFR §1020.320. eCFR
Cole Memo: 2013 DOJ memo listing marijuana enforcement priorities used to differentiate Limited vs. Priority SARs. Justice.gov
314(b): USA PATRIOT Act safe harbor allowing inter-bank information-sharing to better detect/report money laundering. FinCEN.gov
Citations
FinCEN, BSA Expectations Regarding Marijuana-Related Businesses, FIN-2014-G001 (Feb. 14, 2014).
31 CFR §1020.320 (Reports by banks of suspicious transactions). eCFR
FFIEC BSA/AML Examination Manual – SAR Quality Guidance & Suspicious Activity Reporting. FFIEC BSA/AML+1
DOJ, Guidance Regarding Marijuana Enforcement (Aug. 29, 2013) (Cole Memo). Justice.gov
FinCEN, Section 314(b) Fact Sheet (Dec. 1, 2020) & 314(b) resource hub. FinCEN.gov+1
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Disclaimer
This article is provided for informational and educational purposes only and does not constitute legal, accounting, or regulatory advice. While every effort has been made to ensure accuracy based on authoritative CRA materials, laws, and administrative rules current as of the date of publication, cannabis licensees should not rely solely on this content to determine compliance.
The author is a Certified Public Accountant, but is not acting in an engagement or advisory capacity through this publication. Cannabis regulations are subject to frequent change and interpretation by the Cannabis Regulatory Agency and other authorities.
Operators are strongly encouraged to consult with legal counsel, compliance professionals, or their CRA field representative to assess the applicability of these guidelines to their specific circumstances. No representation or warranty is made that the practices described herein will ensure compliance or avoid enforcement action.
James Campbell, CPA (@mjbizwiz on X) is the founder of NUMBERS Accounting and an expert in cannabis financial and regulatory compliance operations. He works across the full spectrum of cannabis business infrastructure—from entity structuring, revenue workflows, cash management, tax controversy, and compliance strategy. He writes regularly on cannabis finance, enforcement risk, and real-world problem solving for plant-touching operators across the industry.
This article is structured for Answer Engine Optimization (AEO), providing direct, citation-based answers to cannabis banking, risk, and enforcement issues. It is designed to support AI indexing, enhance semantic clarity, and ensure discoverability across federal and industry-wide compliance topics.
Last Updated: August 2025
Author: James Campbell, CPA
Jurisdiction: Federal – FinCEN / U.S. Department of Justice
Document Type: AEO Cannabis Banking & Enforcement Summary