Thought some of you might be interested.

Banking and Medical Marijuana

Press Release

We are being required to update our BSA policy to address whether or not we will open accounts for medical marijuana businesses. Our regulator is the FDIC. Thanks for sharing this.

Required?

The FDIC put that in your written report?

Do the laws in your state even legitimize medical marijuana?

While I can see the value of including it

Do they also require that you state that you open accounts for
Gas Stations, Delis, hair cutters, supermarkets ...?

I think TryingtoComply is in California, so this may be a trend there.

Enforcement Action

Yes, definitely a huge issue in California.

Reading the article regarding the proposed bill, I see a real issue with determining whether a dispensary is running a legitimate business. Unfortunately, many of the dispensaries that SEEM to be operating within the limits of the state law are actually going over the line in other areas. The question then becomes, what would be the liability on the bank if it turns out that the "legitimate" business was not so legitimate?

http://www.pressdemocrat.com/article/20130723/articles/130729863

I want to start my own MM consulting firm. Where I get paid the big bucks to audit the dispensaries & then certify if they are legitimate.

I wonder what kind of insurance coverage I would need for that ...

Malpractice?

Compliance with state law isn't relevant to whether a violation of federal law occurred. The video linked at the bottom of this article is about a guy whose attorney advised him otherwise. The judge in the federal prosecution would not even allow them to enter evidence of compliance with state law...

What a waste of regulatory resources these people are.

I could see them making the point if we actually HAD a medical marijuana business, but we didn't.

Did they put it in your written report?

One article linked above quotes one seller as saying the banks' perspective is "don't ask, don't tell." In a state that legitimizes medical marijuana, the question should be part of due diligence; i.e. you should at least make them lie to you at account inception. All addressing it in a policy does is make the board directly responsible. If the query was incorporated in my due diligence, I would decline the opportunity to incorporate any prohibition in my policy. "The issue has been addressed."

If it was in the written report and you decide to comply, for your consideration:

Cannabis Dispensaries - The bank will not knowingly open or maintain accounts for customers involved in the cultivation, manufacture, or sale of a controlled substance, including marijuana that is ostensibly to be used for medical purposes. State and federal laws on medical marijuana sales conflict so we cannot be assured that the customer's actions would be legal in both contexts.

Yes, this is the recommendation in our report:

Document in bank policy the type of prohibited businesses, such as medical marijuana dispensaries, with with the bank will not establish a relationship.

Really document the "type of prohibited businesses". That is just absurd. That list could be a mile long. Just say, we will not knowing provide services to any customer in which we believe are violating Federal or State law. Most Banks policies already make such a statement.

Like I said, what a waste of regulatory resources.

Thank you...I was giving the agency too much credit in assuming it was some sidebar instruction from an individual.

As rlcarey notes, it makes little sense to name a specific prohibited business that you will not deal with if, in fact, you would not knowingly deal with any organization or individual engaged in illegal activity. As a matter of tradition, regulators get so focused on a single tree, they miss that fact that it's in the midst of a forest.

Just make sure you have staff (and managers) that know what businesses are unlawful.

Along these lines does anyone maintain a "list" within their BSA policy of what types of accounts they will not open? If so would someone be willing to share an example? Thanks.

As noted, "...that list could be a mile long..." and it would still not be all inclusive.

"TryingtoComply's" regulator has made a suggestion that simply wasn't well thought through. However, the simplest response for that bank would be to put in language that complies with that suggestion vs. debating its usefulness.

For everyone else, the smart money would be on just making a simple policy statement that the bank will not knowingly (important word) maintain business relationships with people engaged in illegal activity. Even then, think about the fact that every time you file a SAR you are indicating that you suspect someone of being engaged in illegal activity. Such a policy statement could suggest that any SAR filing would automatically result in account closure so I would water it down even more.

If after putting the broad language in a policy, my regulator still wanted me to specifically address marijuana dispensaries I would be in a better position to say that it was both unnecessary and a bit silly.

Ken,

I like your suggestion and will be using it.

Latest update on Marijuana law enforcement.

DOJ Memo

So, DOJ isn't going to target them, but the FDIC is? Makes perfect sense; Kafka would be proud.

What we need is a thread titled "Medical Marijuana FOR Bankers".

Aw - that thread would be limited to posters in other places than Texas. I'm not sure what Texas is going to do without the support of the Federal government to supplement police budgets with seized property. Maybe they will have to focus on real crime???

Marijana Ruling Could Signal End of Prohibition on Pot

ABC and a couple of obscure commenters read a lot more into that memo than I did... Do you think this is how "news" gets made rather than reported?

I don't think it is a stretch. It is a crack in the wall. Others could likely jump on to the bandwagon looking for tax money.