Marijuana and Banking – Never the Twain Shall Meet. Or will they?


One of our upcoming Recreational and Medical Marijuana Law and Business in California speakers, Dante Tosetti, wrote this recently published paper on Federal guidance to enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses: The distinctly separate federal approaches between marijuana-related businesses and marijuana-related business banking.

And if you’re interested in cannabis law at all, or cannabis businesses, you know that banking is one of the biggest issues facing those in the industry. And this includes attorneys who represent cannabis related businesses. After all, if the businesses have to operate as all cash businesses, that means they have to pay you in cash as well. And that means, if you are an attorney or anyone else, you have to follow a host of regulations to ensure you accurately report the income and avoid being accused of money laundering. In other words – banking is a central challenge to cannabis businesses, and those who serve them.

The following is the “abstract” segment of the paper, but you can read the full paper online here.

“In general, state licensed marijuana related businesses (“MRB”) have difficulty obtaining standard banking services from financial institutions since marijuana remains illegal under federal law. The prevailing notion that additional federal action is necessary to open banking services to the marijuana industry is inappropriate. Since MRB banking is inherently high-risk, the argument for additional legal or regulatory leeway to encourage MRB banking is not a sound solution.

Federal guidance is in place for all state and federal chartered banks and credit unions to provide banking services to MRBs. A limited number of financial institutions follow the federal guidance and offer MRB banking services in an open and transparent manner, yet the number of such financial institutions does not meet the overall demand of the marijuana industry. Reinforcement of the federal guidance and awareness of the current best practices within marijuana banking could encourage additional financial institutions to service MRBs. As more financial institutions make the business decision to enter MRB banking under existing regulatory expectations, greater transparency of the marijuana ecosystem will be made available to all stakeholders.” – Dante Tosetti

We hope you’ll join us at the program on November 1-2, 2018. If you miss it, don’t worry, you can purchase the audio recording package here.

Katie Freeman

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