Topic: Marijuana-Related Businesses
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Should we update our existing drug and alcohol policies regarding the new law legalizing the recreational use of marijuana?
Yes, we recommend updating your existing drug and alcohol policies to address employees’ recreational use of marijuana (as distinct from employees’ medical use of marijuana) under the new Cannabis Regulation and Tax Act (“Act”), which may begin as soon as January 1, 2020. The Act includes some protections for employers that wish to restrict employees’…
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We have an opportunity to make a loan to an existing customer that would be secured by a commercial building. Two thirds of the rents from the building come from a licensed medical marijuana dispensary. The customer currently deposits the rents at another bank, and we would not require the customer to maintain a rental account at our bank. However, our mortgage includes an assignment of rents as a standard clause. Would that prevent us from making this loan?
In our view, whether to make a loan secured by commercial property with a licensed medical marijuana dispensary as a tenant is a business decision for your bank. The customer would be considered an “indirect” marijuana related business (MRB), since it leases property to a medical marijuana dispensary, which is a “direct” MRB. Before making…
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We discovered that one of our customers is employed by a marijuana grower from whom the customer receives regular ACH payroll deposits. What is our responsibility with respect to this customer?
In our view, it would be prudent for your bank to treat a customer employed by a marijuana-related business (MRB) as it would treat an “indirect MRB,” since the customer provides services to the MRB (in the form of labor) and receives monies from the MRB that are derived from its federally-prohibited activities. The FinCEN…
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Is it legal for our bank to open accounts for a cannabidiol (CBD) retail business? Are there any applicable federal or state restrictions on banking a CBD business? Are there any additional reporting requirements for these customers?
See CQ 2022-153 for our most recent guidance on banking a CBD or hemp-related business The most cautious answer to your question is that it likely is not legal to bank a CBD retail business unless you are able to verify that the CBD was derived from a federally-legal source. Moreover, if your bank does choose…
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We are aware of our obligation to file a suspicious activity report (SAR) for a customer that purchases hemp seed without a USDA-approved license in a transaction of $5,000 or more — but what about a transaction under $5,000? Is a SAR not required, even though the transaction constitutes “illegal activity?” Do we have a continuing obligation to file SARs as long as our customer continues to cultivate hemp? Also, we have a customer who owns a smoke shop and sells cannabidiol (CBD) oil. Do we need to file a SAR for this customer as well?
See CQ 2019-283 for our most recent guidance regarding SAR-filing responsibilities for hemp/CBD customers. No, your bank is not required to file a SAR in relation to hemp seed in a transaction that does not involve an aggregate amount of less than $5,000 (although you may choose to do so). As recognized in your question,…
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With the passage of the federal Agriculture Improvement Act of 2018 (the 2018 Farm Bill), we understand that some banks remain hesitant regarding hemp customers. Do you know why?
See CQ 2019-283 for our most recent guidance regarding SAR-filing responsibilities for hemp/CBD customers. We believe that producing hemp without a U.S. Department of Agriculture (USDA)-approved license is “unlawful” under federal law, which likely is the source of some banks’ hesitancy regarding the hemp industry. While the 2018 Farm Bill decriminalized the cultivation and sale…
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A farmer wired money from his account at our bank to purchase hemp seed. The farmer said he was awarded a license from Illinois to produce hemp on one acre of land. Should we file a suspicious activity report (SAR)?
See CQ 2019-283 for our most recent guidance regarding SAR-filing responsibilities for hemp/CBD customers. Yes, we recommend filing a SAR in relation to a transaction to purchase hemp seed, unless your customer is an institution of higher learning or a state agricultural department that is growing hemp for research purposes. While Illinois has begun issuing…
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Are banks currently allowed to take deposits related to marijuana production or medical marijuana? We’ve heard that some banks are considering or already are taking deposits from these sources.
The most cautious answer to your question is no – marijuana remains an illegal controlled substance under federal law. While federal legislation has been proposed that would grant a safe harbor for banks providing services to certain marijuana-related businesses (MRBs) that operate legally under state law, no such protections currently exist. Having said that, as…
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Can we open a loan or deposit account for a farmer, grower or company working with cannabidiol (CBD) oil?
Under both Illinois and federal law, it is now legal for companies to sell hemp-derived products such as CBD oil, provided that the hemp-derived product (including CBD oil) meets the statutory definitions of “hemp” and “industrial hemp.” For some background, CBD (cannabidiol) oil is a non-psychoactive cannabinoid compound and is the second most common naturally…
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We have been approached by an investment company that would like to open an account related to its investment in an out-of-state hemp farm. Our current policy is not to open accounts for businesses dealing with hemp or marijuana, but we have not reconsidered our policy since the passage of the federal farm bill legislation regarding hemp. Can you give us a sense of the potential pitfalls of opening an account for the investment company?
Under the new federal law, as well as Illinois law, it now is legal to sell hemp — provided that it meets the statutory definitions of “hemp” and “industrial hemp.” With the passage of the federal Agriculture Improvement Act of 2018, hemp is no longer a Schedule I controlled substance under the federal Controlled Substances…