Money Matters | Legal Corner

From
June 29-July 1, I attended the National Cannabis Industry Association’s
Cannabis Business Summit and Expo in Denver. The conference provided phenomenal
educational and networking opportunities including five different tracks
highlighting the most pressing issues for Cannabusiness owners and operators. 

Most of
the conference was upbeat and exciting. The trade show floor was filled with
innovative companies, and everyone felt empowered and excited to learn about
the various aspects of the industry in the educational tracks. However, there
was one session that left everyone feeling downtrodden and frustrated. You
guessed it. It was the session entitled “The Current Status of Banking for the
Cannabis Industry.” Many folks in the room dubbed it the “fire and brimstone”
session. 

The
panelists spoke at length about how cannabis is still a Schedule I Controlled
Substance and using it, possessing it and distributing it remains a federal
crime. In turn, proceeds from cannabis sales triggers anti-money laundering
laws from banks. The panel also discussed that the Bank Secrecy Act requires
banks to combat fraud by filing Suspicious Activity Reports with the federal
government when the bank knows or suspects that an account holder is engaged in
or trying to cover up illegal activity. 
Nearly all of the nation’s banks refuse to take money from legitimate
cannabis businesses or offer basic checking or credit card services to the
industry for fear they’ll be shut down by federal authorities. 

Many
people asked why the 2014 FinCEN and U.S. Department of Treasury memo which
issued guidance to banks on how deal with cannabis business, did not have a
positive impact on the banking situation. The memo outlined rules that required
banks to report their state-licensed cannabis customers and to ensure they were
following state law and not violating DOJ guidelines. A separate memo followed
from the DOJ directed U.S. Attorneys not to pursue banks, as long as they
adhered to the guidelines.  

The
panel unanimously agreed that the memo did not go far enough to allay bankers’
fears and that only Congress could truly resolve this issue by passing a
comprehensive cannabis-banking bill. Some brave audience members admitted that they
got a bank account by stating that they were a “wellness company” and omitted
their cannabis related activities. The panel gently reminded folks that
misleading activity of bank or merchant services was fraud and money
laundering. Cannabusiness owners lamented about the safety issues of being all
cash businesses. Stories of armed robbery were shared and costly solutions such
as armed guards, floor sensors and panic buttons were shared as a way to try
and protect the businesses and their employees. It was not a hopeful room. The
panel tried to end on an optimistic note stating that “some-day” things would
change for the cannabis industry and that banking regulation for our industry
would eventually be achieved. 

Less
than a month later, “some-day” appears to be closer than many people thought. A
few weeks ago, a group of senators introduced the “Marijuana Business Access to
Banking Act,” a bill that would allow banks to provide depository and other
financial services to state-legal cannabis businesses. The hope is that this
bill would remedy the cash-only system and address the public safety concerns.
Dan Riffle, Federal Policy Director at Marijuana Policy Project, stated that
“Allowing these businesses to access basic banking services is a critical step toward
letting states regulate marijuana as they see fit without federal interference,
a position virtually every serious contender for the 2016 presidential
nomination has taken.”

The
Marijuana Access to Banking Act would ensure that state-legal cannabis
businesses could utilize the financial services necessary to provide protection
and accountability for these businesses. The Act would truly allow businesses
to flourish, maintain accurate bookkeeping and even help local agencies
understand how cannabis businesses really operate. 

It was
with great hope that this Act passes. The banking crisis faced by the cannabis
industry cannot continue any longer. As Amy Margolis of the Oregon Cannabis
Association said, “This is about public safety, fundamental economic fairness
and helping small, family businesses succeed. No licensed compliant business
should have to place themselves and their community in danger because they
cannot open and maintain a bank account.” I could not have said it better
myself.