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With most of the nation’s attention focused on the hotly
contested presidential election, voters in Arizona, California, Maine, Massachusetts
and Nevada will vote on referendums legalizing the use of recreational
marijuana. Recreational marijuana use has already been legalized in Alaska,
Colorado, Oregon, Washington and Washington, D.C. and medicinal marijuana has
been legalized in 25 states.
According to a recent New York Times article,
if the initiative is approved in California, which has the largest economy of
the states, pressure for federal legislation will intensify greatly. Marijuana
businesses operating under state laws that have legalized medicinal or
recreational marijuana have, for the most part, been denied access to the
mainstream financial system because institutions that provide financial
services can be prosecuted under federal law. This has led many of these
businesses to operate using large amounts of cash, creating safety risks and
making taxation difficult.
As a result of pressure from marijuana businesses, states
that have legalized marijuana, and financial institutions that are interested
in servicing these very lucrative businesses, two important memos were issued
by the Department of Justice (DOJ) in August 2013 and February 2014. The
purpose of these memos was to update the federal government’s position on the
prosecution of these state sanctioned marijuana businesses.
These memos clarify that as long as the businesses are
operating in states that allow marijuana-related activities and those states
have strong and effective state regulatory and enforcement systems, the DOJ
doesn’t believe it is an efficient use of federal resources to investigate and
prosecute marijuana businesses.
The two problems CUNA has with this guidance are: (1) it
does not address the federal law violations, and (2) the memos include some due
diligence requirements, which are impossible for credit unions to comply with,
without further guidance.
Additionally, credit unions must comply with the Bank
Secrecy Act (BSA), which requires that funds suspected to be derived from
illegal activities be reported to the Department of Treasury’s Financial Crimes
Enforcement Network (FinCEN) bureau on the agency’s Suspicious Activity Report
(SAR). To assist with this compliance
requirement, FinCEN issued guidelines in February 2014 entitled “BSA Expectations
Regarding Marijuana-Related Businesses”.
Legislation introduced in the House and the Senate provides
a safe harbor for depository institutions providing financial services to a
legitimate marijuana-related business, prohibiting a federal banking regulator
CUNA provided technical assistance to lawmakers on the
legislation. CUNA and the leagues also supported a successful National Conference
of State Legislators resolution urging Congress to help legal cannabis
businesses access banking services and let states determine their own path
forward on cannabis regulation.
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© 2018 Credit Union National Association
ADA Compliance Notice & Legal
© 2017 Credit Union National Association |
ADA Compliance Notice & Legal