Banking Marijuana-Related Businesses Part 1
RLR Management Consulting, Inc.
To Bank Marijuana-Related Businesses or Not? That is the question. Today, it is surmised that there are between 200 and 300 financial institutions (banks and credit unions) knowingly banking marijuana-related businesses (MRBs). You can be sure there are financial institutions that are unknowingly banking MRBs. There have been over 50,000 marijuana-related SARS that have been filed between 2Q 2014 and now.
What is a marijuana related business? A Marijuana-Related Business means any business that grows, produces, buys or sells or otherwise distributes marijuana (a “Marijuana Business”), a business that leases real property or otherwise provides space to a Marijuana Business, or a business that leases or otherwise provides equipment which is directly used to grow or produce marijuana.
Today, the federal government regulates marijuana as a schedule 1 drug through the Controlled Substance Act (CSA0 (21 U.S.C.811), which means the federal government views marijuana as highly addictive and having no medicinal value. The cultivation, possession and distribution of marijuana are illegal under the Federal Controlled Substances Act, and any proceeds deriving from those transaction would be proceeds of an illegal transaction. Hum…today, there are 33 states that have passed laws broadly legalizing marijuana in some form. So, doesn’t that make it legal? NO! Marijuana is still a Schedule 1 drug and against Federal Law.
Waiting for the Federal Government to re-classify marijuana from a Schedule 1 drug is not the answer. Several bills have been introduced into Congress to address the divide between state and federal laws. They have not been the answer. As we write this presentation, the U.S. House Committee on Financial Services’ Subcommittee on Consumer Protection and Financial Institutions will hold a hearing about the issue of cannabis banking and the SAFE Banking Act this month. This would allow marijuana-related businesses in states with existing regulatory structures to access the banking system. This is the first-ever congressional hearing on cannabis banking. More to come…