Banking & Finance Law Report

Tag Archives: Banking Marijuana Businesses

The Bank Industry’s Cannabis Problem

The banking industry has a cannabis problem—it cannot bank cannabis related businesses.

Despite the fact that over 35 states have legalized medical cannabis in some form and more than 10 others have recreational cannabis laws, the mainstream banking industry has been largely unable to provide services to lawful cannabis companies. That is because federal law still views cannabis as an illegal Schedule I drug subject to the Controlled Substances Act—on par with drugs such as heroin.

This complex federal overlay has prevented the banking industry from being able to service not only cannabis companies, but also non-plant touching ancillary businesses working with cannabis companies. Consequently, banks are forced to sit on the sidelines while cannabis companies try to figure out what to do with their growing cash reserves.…

High Risks of Banking with “Legal” Marijuana Businesses

Twenty-three states and the District of Columbia now permit the use and possession of marijuana to some degree under state law, and public support for legalization is at an all-time high. Despite the growing number of states legalizing marijuana, however, it remains a Schedule 1 controlled substance under the federal Controlled Substances Act (CSA). President Trump’s appointment of Alabama Senator Jeff Sessions, a long-time cannabis critic, as attorney general, brings even more uncertainty to currently hazy federal enforcement efforts. For banks and other financial institutions interested in providing loans or other banking services to the “legal” marijuana industry, the current federal prohibition and related regulatory challenges continue to result in risks that most institutions will find too high to overcome.

Federal Law and Current Guidance.

Because the manufacture, distribution, and dispensation of marijuana remains illegal under the CSA, banks and other financial institutions providing services to marijuana-related businesses risk violation of federal anti-money laundering statutes (18 U.S.C. §§ 1956 and 1957), the unlicensed money-remitter statute (18 U.S.C. § 1960) and the Bank Secrecy Act (BSA). These statutes can impose criminal liability for engaging in certain financial and monetary transactions with the proceeds of a “specified unlawful activity” and for …

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