I have a client that sells "natural" vitamins online & they are getting into the Cannabidiol industry. Of course they give me all the same jazz I can google about (It's not THC, it's legal form of hemp, it's the same stuff in hemp lotion) ..... but there does seem to still be some controversy over it.

Anyone else deal with something similar?

The legal status of Cannabidiol in the United States at the federal level is not immediately clear. The Controlled Substances Act (CSA) does not specifically list cannabidiol in Schedule I[55] nor in any of the other schedules,[56] However, public statements by the Drug Enforcement Administration have long represented cannabidiol as Schedule I.[57][58]

https://en.wikipedia.org/wiki/Cannabidiol#Legal_status_in_the_United_States

and

H.R. 525: Industrial Hemp Farming Act of 2015

Prognosis:
1% chance of being enacted


https://www.govtrack.us/congress/bills/114/hr525

yeah I found all that too - but nothing is really clear on if I'm supposed to file SARs or if it's really marijuana ? because if it's really like the hemp lotion - then whoever banks Bath & Body Works would have to file SARs too ....... seems like I'm going way to far down a rabbit hole here.

What do you specifically mean by "they are getting into the Cannabidiol industry"?

Ok make me work today

According to the U.S. Food and Drug Administration (FDA), because cannabidiol has been studied as a new drug, products containing cannabidiol are not defined as dietary supplements.

http://www.webmd.com/vitamins-supplement...ame=CANNABIDIOL

if it is not a dietary sup. I would think that it is a drug and not a OTC product.


https://healthyhempoil.com/cannabidiol-legal-status/

I do not know this cite

I (my opin only) would treat this as medical pot.

They are researching Cannabidiol and financing the development of a new supplement. They've already filed with the DEA to get the required research registration.

http://www.dea.gov/divisions/hq/2015/hq122315.shtml

DEA Eases Requirements for FDA-Approved Clinical Trials on Cannabidiol
DEC 23 (WASHINGTON) - The United States Drug Enforcement Administration (DEA) recently eased some of the regulatory requirements imposed by the Controlled Substances Act (CSA) for those who are conducting FDA-approved clinical trials on cannabidiol (CBD), an extract of the marijuana plant. These modifications will streamline the research process regarding CBD’s possible medicinal value and help foster ongoing scientific studies. The DEA notified affected researchers by letter of the changes, which take effect immediately.

Federal Regulation (21 CFR 1301.18) requires researchers conducting CBD-based clinical trials under an FDA Investigational New Drug Application to have a DEA research registration. This registration permits the possession of an approved amount of CBD for a specific research protocol. Prior to now, researchers who expanded the scope of their studies and needed more CBD than initially approved for had to request, in writing, a modification to their DEA research registrations – potentially delaying that research while the modification underwent an approval process that includes both the DEA and the Food and Drug Administration (FDA). Under these changes, a previously registered CBD clinical researcher who is granted a waiver can readily modify their protocol and continue their research seamlessly. This waiver effectively removes a step from the approval process.

Marijuana is a Schedule I controlled substance because of the presence of tetrahydrocannabinol (THC), marijuana’s psychoactive ingredient. Because CBD contains less than 1 percent THC and has shown some potential medicinal value, there is great interest in studying it for medical applications. Currently, CBD is a Schedule I controlled substance as defined under the CSA. Though the FDA approves drugs for medical use in the United States, the DEA regulates the handling of all controlled substances, including those being used by researchers to conduct studies.

Let me add some more mud to this 'clear" water

The United States Drug Enforcement Administration (DEA) recently eased some of the regulatory requirements imposed by the )

Does the DEA have the authority to override an act of Congress and signed by a sitting POTUS?

Unless this specific customer is very profitable, instead of pulling your hair out trying to figure all of this out then taking the time to explain it to your regulator in a manner that they are going to understand in a future exam, I would just pass on the banking opportunity.

Already a client. & believe me I would love to just exit - but in the real world of banking - things get a little more political than that.

So I'm trying to justify my case for exiting with management & provide a smart recommendation. If management decides to keep open - trying to figure out if I have to file SARs or not.

Tell them that it is a grey area and the best thing for the bank to do would be to file every 90 days that the business relationship is maintained while they are involved in Cannabidiol. Have them figure the cost of that into the profit margin generated by the customer and let them make the call. Why a client would bother telling the bank such a thing immediately raised my eyebrows. Why would they if they are an existing client?? Unless you were already doing extra due diligence on them for some other reason?

From the DEA article you copied:



That seems to make it clear, it's a "marijuana related business" triggering the DOJ and FinCEN guidance on SAR filing. I agree with rlcarey's advice. However, I suggest you also tell management (in writing) that (if they intend to keep this customer) it's time to amend the policy to say you will bank marijuana related businesses.

In other words, keeping this customer is an important precedent. The board should be involved in the decision. If management disagrees, so be it, clutch your memo to your chest and move on.