Topic: Marijuana-Related Businesses
-
Are health food products derived from hemp currently legal to sell in Illinois and the United States in general?
Yes, we believe health products containing hemp may be legal to sell under both federal and state law, provided they meet the statutory definitions of “hemp” or “industrial hemp.” However, hemp products containing cannabis and cannabis-derived compounds also must comply with the Food and Drug Administration’s (FDA) regulations and authority. With the passage of the…
-
We have a customer who did some construction work for a marijuana dispensary and was paid in cash. The customer deposited the cash in $9,900 increments, so we are filing a suspicious activity report (SAR) due to structuring. Should we file a marijuana-specific SAR? Should we mention that the customer is doing business with a marijuana-related business (MRB), even though that is not the reason for the SAR? Does our customer qualify as an MRB if they do work for an MRB?
Under the FinCEN Guidance, your customer would be considered an “indirect” MRB because it provides services to a marijuana dispensary. Therefore, we do not believe you are required to file an MRB-specific SAR. However, we do recommend noting in your SAR that the cash payments you believe your customer is structuring were from an MRB.…
-
We have a customer who is selling products through the internet claiming to be derived from hemp. His website states that they utilize a technique that removes naturally occurring trace amounts of THC from their products, while preserving certain compounds such as “cannabigerol (CBG), cannabinol (CBN), cannabichromene (CBC), and over 40 naturally preserved terpenes.” Is it legal in Illinois to sell and distribute such products?
No, we believe that the sale of these products currently is illegal under both federal and Illinois law. The federal Drug Enforcement Agency views products containing hemp and other cannabis derivatives as being included in the prohibition against the production, sale, or possession of cannabis (“marihuana”) in Schedule I of the federal Controlled Substances Act.…
-
A customer with a business deposit account manufactures herbicides for farmers, some of whom grow medical marijuana. Occasionally, our customer deposits checks from the medical marijuana farmers. Is our customer considered a marijuana-related business? Do we have to close his account?
Your customer would be considered an “indirect” marijuana-related business (MRB) because he is providing goods or services to an MRB. Your bank does not have to close this account, but you should review the customer’s deposits from the medical marijuana farmers in order to determine your Suspicious Activity Report (SAR) filing obligations, as discussed below.…
-
We initiated a wire transfer under $5,000 on behalf of a customer (an individual) to an out-of-state business account that was returned. The receiving financial institution informed us that the account number cannot receive wire transfers, but declined to provide any additional information. We researched the business and discovered that it is a marijuana-related business operating in a state where cannabis is legal. Is a suspicious activity report (SAR) warranted?
Based on the facts provided, we believe that filing a voluntary SAR would be prudent. We note, though, that filing a marijuana-specific SAR is not required in this case. A financial institution is required to file a SAR on activity involving a marijuana-related business — including one appropriately licensed under state law — in accordance…
-
For purposes of providing banking services to a marijuana-related business and complying with federal law, does it make a difference if a financial institution has a state or federal charter?
No, it does not matter whether the financial institution has a federal or state charter – federal law applies to every institution. Even though Illinois law creates a limited exception to Illinois' criminal laws for growing, dispensing and using medical cannabis for certain patients, the Controlled Substances Act makes it illegal under federal law to…
-
Are we required to individually risk rate new customers as part of our account opening procedures? Are we required to continually monitor existing customers? Also, do we need to ask each new customer about their marijuana activities as part of the risk rating? This is upsetting our customers and our employees.
No, you are not required to individually risk rate each customer — it is possible to assign a risk rating to groups of customers “based on account type or customer classification” under the FFIEC BSA/AML Examination Manual’s guidance. Of course, higher-risk customers “should be reviewed more closely at account opening” under the “enhanced due diligence”…