Last week, the National Credit Union Administration (NCUA) issued interim guidance stating that federally insured credit unions may provide certain financial services to legally operating hemp businesses. The guidance offers reassurance to credit unions following the 2018 Farm Bill, which federally legalized hemp, but failed to address banking in the hemp industry, leaving the banking industry uncertain as to their capacity to legally serve the industry. The NCUA noted that credit unions will be able to provide the customary range of financial services for business accounts, including loans, to hemp businesses, but that credit unions will still need to ensure compliance with the Bank Secrecy Act and Anti-Money Laundering requirements. This means that, among other things, credit unions still must perform due diligence in maintaining accounts and ensuring that the hemp business is lawfully operating under a state program, and must file Suspicious Activity Reports (SARs) for illegal and suspicious activities. The new guidance will be updated once the USDA finalizes forthcoming regulations and guidelines.
The need for cannabis businesses to have access to banking services continues to gain federal support. Last week at a CannaGather event in New York City Rep. Carolyn D. Maloney (D-NY) stated that she believed that the Secure and Fair Enforcement (SAFE) Banking Act would pass in the House. And at a CannaGather event in Denver, Rep. Ed Perlmutter (D-CO), an introducer of the bill, also stated that the bill has strong bipartisan support and is hopeful it will pass. The need for safety is a strong driver, he said, as currently, marijuana businesses are forced to operate in cash if they cannot obtain banking services, making them targets for crimes. Money laundering and lost tax revenues are also a concern, as businesses operating in cash may be less likely to report income. If passed, the SAFE Banking Act will protect banks from federal prosecution for providing services to cannabis-related businesses so long as those businesses are compliant with the state laws under which they operate.
In today’s story from Bloomberg Tax , however, some industry executives are not too confident that the bill will pass. Rachel Gillette, chair of the firm’s Cannabis Law Practice, told the publication, “People don’t realize how many businesses are affected by legal cannabis. I’ve seen dispensary employees have their bank accounts shut down. I’ve seen a lack of banking options affect service providers, like electricians, who are hired by dispensaries.” Gillette isn’t confident the SAFE Banking Act will see much action, however, despite its 206 co-sponsors. “I’d give it a 3% chance of being enacted,” she said.
In the meantime, dispensaries look to other cashless solutions like apps and blockchain-based technology, but cash remains king. “You will always be cash-heavy if you’re selling cannabis,” said Gillette. “Most consumers pay in cash, and most consumers won’t want to take the extra step to change their cash in for a virtual currency if given the chance—that just doesn’t work.”
About Greenspoon Marder Greenspoon Marder LLP is a full-service law firm with over 225 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has maintained a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.
MEDIA CONTACT
Natalie Villanueva, Director of Marketingnatalie.villanueva@gmlaw.com
This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.
