Update: “Marijuana Businesses Access to Banking Act of 2013″ proposed in Congress to ease burdens associated with providing banking services to marijuana-related businesses

On July 10, 2013, U.S. Representatives Ed Perlmutter (D-Colorado) and Denny Heck (D-Washington) introduced the “Marijuana Businesses Access to Banking Act of 2013” (“Access to Banking Act”) in the United States House of Representatives. The bill is designed to update federal banking laws to create protections for depository institutions that provide financial services to marijuana-related businesses. A copy of Rep. Perlmutter’s press release can be read here.

As we have previously reported, despite the growing number of States that have sanctioned the use of marijuana in various forms, the federal government has continued its efforts to crack down on dispensaries. (Our recent articles discussing these efforts can be read here, here, here and here.). In addition to direct criminal prosecution for drug trafficking, dispensaries face additional legal barriers which make operation difficult. As we previously reported, one such practical legal barrier dispensaries face is finding banks, credit card companies, and payment processors to process the proceeds of marijuana sales. As we previously explained, because the sale of marijuana remains prohibited under federal law, banks are placed in a position where they would be required to report any banking transactions involving proceeds from marijuana dispensaries. Moreover, banks face the realistic possibility of criminal penalties for assisting in money laundering should they knowingly accept and process funds from dispensaries.  As a result of these risks and possible penalties, banks have simply refused to allow marijuana dispensaries to maintain accounts or conduct business.

However, the Access to Banking Act attempts to resolve this problem by allowing “depository institutions,” defined within the act as 1) a depository institution as defined in 12 U.S.C. § 1813(c); or 2) a federal credit union or state credit union as defined in  12 U.S.C. § 1752, legal authority to provide banking services to “marijuana-related legitimate businesses.” (“Marijuana-related legitimate business” is defined within the act as “a manufacturer, producer or any person that (A) participates in any business or organized activity that involves handling marijuana or marijuana products, including selling, transporting, displaying, dispensing, or distributing marijuana or marijuana products; and (B) engages in such activity pursuant to a law established by a State or a unit of local government.)

The Access to Banking Act would provide a “safe harbor” for depository institutions under which a federal banking regulator may not:

  1. terminate or limit a depository institution’s access to FDIC depository insurance for providing financial services to a marijuana-related legitimate business;
  2. prohibit, penalize, or discourage a depository institution from providing financial services to marijuana-related legitimate businesses;
  3. recommend, incentivize, or encourage a depository institution not to offer financial services to an individual solely because the individual is a manufacturer, producers or owner/operator of a marijuana-related legitimate business; and
  4. take any action against a loan to an owner/operator of a marijuana-related legitimate business.

The Access to Banking Act would also provide immunity from Federal criminal prosecution for depository institutions who provide such services.

In addition, the Access to Banking Act would amend 31 U.S.C. § 5318 of the Bank Secrecy Act, 31 U.S.C. §§ 5311-5330, to exempt depository institutions from the requirement to file Suspicious Activity Reports (“SAR”) solely because a party to the transaction is a marijuana-related legitimate business. (12 C.F.R. § 21.11 requires national banks to file Suspicious Activity Reports (“SAR”) when the bank knows, suspects, or has reason to suspect that a transaction involves funds from illegal activities or is intended or conducted in order to hide or disguise funds or assets derived from illegal activities as part of a plan to violate or evade any law or regulation or to avoid any transaction reporting requirement under Federal law.)

Although the bill has a long way to go before becoming law, the Access to Banking Act has the potential to be a game-changer for the State sanctioned legalized marijuana industry. Fuerst, Ittleman, David &Joseph, PL will continue to monitor the bill for its latest developments. The attorneys at Fuerst Ittleman David & Joseph, PL have extensive experience in the areas of administrative law, constitutional law, regulatory compliance, white collar criminal defense and litigating against the U.S. Department of Justice. You can reach an attorney by emailing us at contact@fuerstlaw.com or by calling us at 305.350.5690.

This entry was posted on Tuesday, August 13th, 2013 at 12:10 pm and is filed under AML-BSA.

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