At first blush, this doesn’t appear to be a constructive improvement for authorized marijuana companies. However, it’s. In February of 2014, FinCen issued FIN-2014-G001 “BSA Expectations Regarding Marijuana-Related Businesses”. This steerage asks depository establishment to challenge three several types of SARs for marijuana companies. A “marijuana limited” SAR ought to be used when the depository establishment, based mostly on its personal due diligence, believes that the marijuana enterprise depositing funds does implicate a Cole Memorandum precedence or a violation of state regulation. This sort of SAR is filed solely as a result of the depositor is engaged in a marijuana associated enterprise and no different suspicious exercise has been recognized.
A “marijuana priority” SAR and a “marijuana termination” SAR are filed when the depository establishment believes that a Cole memo precedence is implicated or cash laundering is happening, respectively. These are purple flag filings. The replace issued by FinCen signifies that marijuana restricted filings sharply elevated throughout the first quarter of 2017, however marijuana precedence and marijuana termination filings remaining comparatively flat. This signifies that, along with extra banks accepting deposits from marijuana companies, extra transactions are occurring the place there isn’t any obvious violation of the Cole Memo.
If Congress enacts the Secure and Fair Enforcement Banking Act (the “SAFE Banking Act”), a bi-partisan invoice presently being thought-about in the House Financial Services Committee, depository establishments corresponding to banks and credit score unions could have further protections from opposed federal motion in the event that they choose to offer providers to marijuana companies. Even with out legislative motion, this new report from FinCen signifies that banking for marijuana companies is on the rise.
If you have got a marijuana enterprise that’s trying to make use of a financial institution, or in case you are a financial institution or credit score union wishing to simply accept deposits from marijuana companies, be happy to contact me or any member of the Cannabis Industry Group to debate the prospects of doing so.
Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is against the law underneath federal regulation, no matter state regulation which can, in some jurisdictions, decriminalize such exercise beneath sure circumstances. Penalties for violating federal drug legal guidelines are very critical. For instance, a conviction on a cost of conspiracy to promote medicine carries a compulsory minimal jail time period of 5 years for a primary offense and, relying on the amount of marijuana concerned, the high quality for such a conviction might be as excessive as $10 million. In addition, the federal authorities might seize, and search the civil forfeiture of, the actual or private property used to facilitate the sale of marijuana in addition to the cash or different proceeds from the sale. Although the U.S. Department of Justice has famous that an efficient state regulatory system, and a marijuana operation’s compliance with such a system, must be thought-about in the train of investigative and prosecutorial discretion, its authority to prosecute violations of federal regulation isn’t diminished by the passage of state legal guidelines which can decriminalize such exercise. Indeed, because of the federal authorities’s jurisdiction over interstate commerce, when companies present providers to marijuana producers, processors or distributors situated in a number of states, they probably face a better degree of scrutiny from federal authorities than do their clients with native operations.