As banks are learning to navigate the murky legal waters inherent to cannabis-related businesses, they are increasingly becoming open to housing cannabis-related business accounts, even with the substantial burden placed on them by the federal government to comply with their respective state laws.
In August 2013, then-Attorney General James M. Cole issued a memorandum to all U.S. attorneys, which was published by the Department of Justice, setting expectations for the federal government, state governments, and law enforcement on how to address state-implemented, legal-adult-use cannabis programs. In summary, the Cole Memo told states that, if they implement a strict regulatory framework; prevent diversion by employing a seed-to-sale tracking system to monitor the growth, distribution, and sale of regulated cannabis; and create a transparent, accountable market, the federal government will, essentially, leave them alone.
Almost six months later, Attorney General Cole issued further guidance as to how the original memo would impact certain cannabis-related financial crimes. He stated that the provisions of money-laundering statutes, the unlicensed money-remitter statute, and the Bank Secrecy Act remain in effect with respect to marijuana-related conduct, and that Section 1956 of Title 18, otherwise known as the federal anti-money laundering statute, makes it a criminal offense to engage in certain financial and monetary transactions with the proceeds of a “specified unlawful activity.”
The follow-up to the Cole Memo highlighted examples of non-compliance, such as a financial institution providing banking services to a cannabis company knowing that the business is diverting marijuana from a state in which marijuana sales are regulated to ones where such sales are illegal. Other non-compliant acts could be allowing a criminal organization to conduct financial transactions for its criminal goals, such as the concealment of funds derived from other illegal activity, or the use of marijuana proceeds to support other illegal activity. What this means is that, if the financial institution is willfully blind to such activity by, for example, failing to conduct appropriate due diligence of its customers’ activities, prosecution might be appropriate.
This issue still remains very much in the air, but certain banks are beginning to entertain the possibility of housing cannabis-related bank accounts, while also ensuring they are adhering to the strict compliance set forth from the federal government.