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  • California to allow banks to service licensed cannabis businesses

    State Issues

    On September 29, the California governor approved AB 1525, which provides, among other things, that banks and accountants that provide financial services to cannabis businesses are not in violation of California law “solely by virtue of the fact that the person receiving the benefit of any of those services engages in commercial cannabis activity as a licensee.” The bill also allows licensed cannabis businesses to sign a waiver permitting state or local licensing and regulatory authorities to share “application, license, and other regulatory and financial information” with a designated financial institution “for the purpose of facilitating the provision of financial services for that licensee.”

    State Issues State Legislation Cannabis Banking

  • 34 state AGs urge inclusion of cannabis banking legislation in Covid-19 relief

    State Issues

    On May 19, a group of 34 state attorneys general wrote to congressional leaders urging the inclusion of the SAFE Banking Act in any future Covid-19 relief package. As previously covered by InfoBytes, the SAFE Banking Act was passed by the House in September 2019 and would provide a safe harbor for depository institutions that provide a financial product or service to a covered business in a state that has implemented laws and regulations that ensure accountability in the marijuana industry. In the letter, the attorneys general outline three reasons legislative action for cannabis banking is needed based on the Covid-19 pandemic: (i) cash-intensive business models could be a target of increased criminal activity; (ii) large cash transactions place the public and government officials at heightened risk of virus exposure; and (iii) tax revenue from over $15 billion in sales in 2019 could provide critical relief for state and local governments. The letter reminds congressional leaders that support for the SAFE Banking Act, or similar legislation, “is not a call for the legalization of medical or retail marijuana in [] jurisdictions that choose not to pursue such an approach,” instead it would be a reflection that “our federalist system of government that is flexible enough to accommodate divergent state approaches.”

    State Issues State Attorney General Covid-19 Federal Issues Federal Legislation Cannabis Banking SAFE Act

  • Colorado announces roadmap to cannabis banking

    State Issues

    On February 3, the Colorado governor announced plans to create a regulatory landscape to provide guidance and clarity for state-chartered financial services industries that serve, or wish serve, legal cannabis-related businesses. The Roadmap to Cannabis Banking & Financial Services—primarily driven by the state’s Division of Banking and the Division of Financial Services—is intended to increase the number of financial service providers in the state who serve cannabis-related businesses and cultivate opportunities for cannabis-related businesses that currently do not have access to banking services. According to the announcement, the roadmap outlines seven primary areas of focus, which include “providing clear regulatory guidance, encouraging new and emerging technologies in the banking and financial services space, reducing barriers while upholding consumer protection guardrails, and demonstrating state support for financial businesses wishing to explore cannabis banking.” The press announcement noted that the governor was joined by the lead sponsor of the federal SAFE Banking Act (H.R. 1595), which, as previously covered by InfoBytes, passed the House last September and currently awaits action in the Senate.

    State Issues State Regulators Cannabis Banking

  • California DBO issues cannabis banking guidance

    State Issues

    On October 3, the California Department of Business Oversight (DBO) issued guidance for state-chartered financial institutions that serve cannabis-related businesses. The guidance, which is intended to help financial institutions manage risks appropriately, addresses cannabis program governance and compliance with the Bank Secrecy Act (BSA), as well as cannabis banking guidance issued in 2014 by the Financial Crimes Enforcement Network (FinCEN). As previously covered by InfoBytes, FinCEN’s guidance—which includes federal law enforcement priorities still in effect that were taken from a now-rescinded DOJ memo—details the necessary elements of a customer due diligence program, ongoing monitoring and suspicious activity report filing requirements, and priorities and potential red flags. Notably, the DBO states that while it will not bring regulatory actions against state-chartered financial institutions “solely for establishing a banking relationship with licensed cannabis businesses,” it expects all financial institutions to comply with FinCEN’s BSA expectations and guidance to make appropriate risk assessments. The DBO also referred bank examiners to its September Cannabis Job Aid, which is intended to assist with the examination of financial institutions that may be banking cannabis-related businesses.

    State Issues Cannabis Banking CDBO FinCEN Bank Secrecy Act Examination

  • House passes one marijuana banking bill while state AGs urge passage of another

    Federal Issues

    On September 25, the U.S. House passed the SAFE Banking Act (H.R. 1595) by a vote of 321-103. As previously covered by InfoBytes, in March, the House Financial Services Committee passed the bipartisan measure, which would provide a safe harbor for depository institutions that provide a financial product or service to a covered business in a state that has implemented laws and regulations that ensure accountability in the marijuana industry.

    Additionally, on September 23, a bipartisan group of 21 state attorneys general wrote to members of Congress to urge the advancement of a different piece of legislation that would allow banks to serve marijuana-related businesses in states and territories that have legalized certain uses of marijuana. Specifically, the letter expresses support for the Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act), which “would allow each [s]tate and territory to determine, for itself, the best approach to marijuana legalization within its borders, while at the same time creating protections to ensure that such regulation does not impose negative externalities on those states and territories that choose other approaches.” The AGs emphasize that neither the SAFE Act (S.B. 1028 and H.R. 2093) nor the letter serve as an endorsement of any “particular approach to cannabis policy,” but rather are intended to prevent residents of states and territories that have legalized some form of marijuana from being subjected to “a confusing and dangerous regulatory limbo.” The STATES Act would effectively exempt marijuana from the Controlled Substances Act (CSA) in states where the drug has been legalized. In addition to providing an exemption from the CSA, the STATES Act would reduce businesses’ reliance on cash-only models—which, the AGs argue, make it more difficult to track revenue for tax and regulatory compliance purposes—and provide certain protections for states that choose to operate in this industry.

    Federal Issues Federal Legislation State Attorney General Cannabis Banking

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