SL: "My on the record response is typically "based on a conversation I had with FDIC about a year ago, my understanding is that yes, deposits are covered up to the $250k, but you may want to confirm with your insurance rep to confirm that is still the case.""
PS: "Regarding fdic, I normally say, if you call the FDIC they won't give you an on record response regarding insuring "cannabis deposits", but if you look around no banks have gotten their fdic coverage terminated due to banking cannabis."
The head of the Federal Deposit Insurance Corporation (FDIC) said this week that marijuana business banking represents one of the most “challenging issues that I have encountered” at the agency.
“At a federal level it is still an illegal substance. And at many state levels, it’s now legal, and it’s legal to frankly bank it at a state level,” Chair Jelena McWilliams said. “And so banks find themselves caught between the federal regulatory regime and the state.”
While Congress continues to debate legislation to resolve the conflict, McWilliams told Crain’s Detroit that in the interim, she tells banks there’s “so much uncertainty in this space that as a federal regulator, I still have to say, it’s illegal to bank marijuana. But to the extent that you’re doing it because it’s legal in your state, please follow FinCEN guidance.”
“We know we have banks that are banking marijuana businesses, and you know, we can’t bless them and say ‘go ahead and do it,'” she added. “But to the extent you’re doing it because it’s legal in your state, follow FinCEN guidance.”
Note: this document does not specifically reference marijuana
The FDIC encourages insured depository institutions to serve their communities and recognizes the importance of the services they provide. Individual customers within broader customer categories present varying degrees of risk. Accordingly, the FDIC encourages institutions to take a risk-based approach in assessing individual customer relationships rather than declining to provide banking services to entire categories of customers, without regard to the risks presented by an individual customer or the financial institution’s ability to manage the risk. Financial institutions that can properly manage customer relationships and effectively mitigate risks are neither prohibited nor discouraged from providing services to any category of customer accounts or individual customer operating in compliance with applicable state and federal law."
Department of the Treasury, Financial Crimes Enforcement Network - February 14, 2014
"This FinCEN guidance clarifies how financial institutions can provide services to marijuana-related businesses consistent with their BSA obligations. In general, the decision to open, close, or refuse any particular account or relationship should be made by each financial institution based on a number of factors specific to that institution. These factors may include its particular business objectives, an evaluation of the risks associated with offering a particular product or service, and its capacity to manage those risks effectively. Thorough customer due diligence is a critical aspect of making this assessment."
https://www.fincen.gov/sites/default/files/shared/FIN-2014-G001.pdf
By David Baumann | August 05, 2019 at 09:30 AM
Credit unions in states where marijuana is legal won’t be sanctioned for providing services to cannabis-related businesses as long as they follow money laundering, Bank Secrecy Act, safety and soundness and other rules, NCUA Chairman Rodney Hood said Friday.
“It’s a business decision for the credit unions if they want to take the deposits,” Hood told CU Times, in a wide-ranging interview at NCUA headquarters in Alexandria, Va.
He added, “We don’t get involved with micro-managing credit unions.”
He said that credit unions that provide services to cannabis-related businesses must comply with FinCEN rules, file Suspicious Activity Report and must strictly adhere to other rules.
Then, they will not be cited for merely doing business with cannabis firms, Hood said."
Marijuana-Related Businesses:
1. Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.
2. Whether a business is eligible is determined by the nature of the business’s specific operations. The following businesses are ineligible:
(a) “Direct Marijuana Business” -- a business that grows, produces, processes, distributes, or sells marijuana or marijuana products, edibles, or derivatives, regardless of the amount of such activity. This applies to personal use and medical use even if the business is legal under local or state law where the applicant business is or will be located.
(b) “Indirect Marijuana Business” -- a business that derived any of its gross revenue for the previous year (or, if a start-up, projects to derive any of its gross revenue for the next year) from sales to Direct Marijuana Businesses of products or services that could reasonably be determined to support the use, growth, enhancement or other development of marijuana. Examples include businesses that provide testing services, or sell grow lights or hydroponic equipment, to one or more Direct Marijuana Businesses. In addition, businesses that sell smoking devices, pipes, bongs, inhalants, or other products that may be used in connection with marijuana are ineligible if the products are primarily intended or designed for such use or if the business markets the products for such use.
(c) Hemp-Related Business” -- a business that grows, produces, processes, distributes or sells products purportedly made from “hemp” is ineligible unless the business can demonstrate that its business activities and products are legal under federal and state law. Examples of legal hemp products include paper, clothing and rope.
Leasing Part of a Building Acquired with Loan Proceeds (13 CFR § 120.131). Chapter 2, Paragraph V.F.1.g) (page 131). Currently, this SOP paragraph provides that, during the life of an SBA-guaranteed loan, the borrower may not lease space to a business that is engaged in any activity that is illegal under federal, state or local law. For consistency with the changes identified above regarding marijuana-related businesses, Lenders are advised that, during the life of the SBA-guaranteed loan, a borrower may not lease space to the ineligible businesses described above because the collateral could be subject to seizure and because payments on the SBA loan would be derived from illegal activity. If a borrower does lease to an ineligible marijuana-related business, SBA District Counsel should be consulted to determine what action should be taken.
Rather than make its own marijuana policy, the USTP will continue to enforce the legislative judgment of Congress by preventing the bankruptcy system from being used for purposes that Congress has determined are illegal.
In conclusion, a financial institution choosing to establish a relationship with a marijuana-related business should be familiar with the Cole memos and FinCEN guidance. Such a relationship should be incorporated into an institution’s risk-management system. The Bank Department will provide updated guidance, as warranted, but particularly after the new administration takes office. All institutions must remain aware when considering a marijuana related business relationship that the new federal administration could change these policies at any time.
http://banking.arkansas.gov/public/userfiles/Important_Info/Marijuana.Memo.11-29-16.pdf
As you and your bank’s management team and Board of Directors continue discussions and determinations on what, if any, involvement your bank will conduct with a marijuana–related business, I want to encourage you to engage in thorough analysis, develop sound, documented plans and strategies and consult with external sources as much as possible.
http://banking.arkansas.gov/public/userfiles/Important_Info/AR.Slides.Marijuana_Banking.07-18-17.pdf
State of California Department of Business Oversight - October 2, 2019
"The DBO will not bring regulatory actions against state‐chartered banks or credit unions solely for establishing a banking relationship with licensed cannabis businesses; however, the DBO expects all financial institutions to comply with FinCEN’s BSA expectations, including the FinCEN guidance and priorities set forth in the Cole Memo, and identify, evaluate, and manage risks appropriately."
https://dbo.ca.gov/wp-content/uploads/sites/296/2019/10/FINAL-DBO-Cannabis-Banking-Guidance-Memo.pdf
HOUSE BILL 20-1217
44-10-401. Classes of licenses. (5) A state chartered bank or a credit union may loan money to any person licensed pursuant to this article 10 for the operation of a licensed medical or retail marijuana business.
https://leg.colorado.gov/sites/default/files/2020a_1217_signed.pdf
Division of Financial Institutions, Department of Commerce and Consumer Affairs - October 2015
"• Banks and other financial institutions may open accounts for high risk businesses such as medical marijuana related businesses based on the risk assessment and risk tolerance of the financial institution.
• Banks and other financial institutions must implement and follow appropriate customer due diligence standards.
• Regulators will be examining banks for BSA/AML compliance."
https://health.hawaii.gov/medicalcannabisdispensary/files/2016/02/HSBA-PPT-DFI-F-PDF.pdf
https://illinoistreasurer.gov/Financial_Institutions/Cannabis
Essentially the SAFE Banking Act but applied to the Louisiana Commissioner of the Office of Financial Institutions.
"These procedures outline the general review of credit union financial services related to the marijuana industry and related businesses/members. As the risks related to offering services in this space are varied and high, (particularly while federally illegal), the institution’s due diligence and ongoing control over such a portfolio must be robust. Examiners must evaluate management’s due diligence in deciding to provide such services. The board and management must have clear understanding of the associated risks, and satisfactory risk management tools in place which are functioning soundly."
https://www.michigan.gov/documents/difs/10160_MRB_704841_7.pdf
State of Michigan Department of Insurance and Financial Services - January 8, 2020
"DIFS will review the potential impact of marijuana-related financial services on an institution's overall risk profile as part of any examination assessment and ratings process. Examiners will continue to utilize risk-based examination procedures, and regulator expectations for the institution's risk management functions will be commensurate with the inherent risk to the institution's safety and soundness. DIFS will not take regulatory action based merely on the involvement of the marijuana industry in any financial institution's products, services, or activities. However, regulatory action will result if the financial institution fails to identify, manage, account for, or provide sufficient safeguards related to the risks of marijuana-related financial products or services."
https://www.michigan.gov/documents/difs/Letter_2020-CU-01_676151_7.pdf
A financial institution that provides financial services to any cultivator, processor, retail dispensary, or laboratory licensed under this chapter shall be exempt from any criminal law of this state an element of which may be proven by substantiating that a person provides financial services to a person who possesses, delivers, or manufactures marijuana or marijuana derived products, including section 2925.05 of the Revised Code and sections 2923.01 and 2923.03 of the Revised Code as those sections apply to violations of Chapter 2925. of the Revised Code, if the cultivator, processor, retail dispensary, or laboratory is in compliance with this chapter and the applicable tax laws of this state.
“[Upon] the request of a financial institution, the department of commerce or state board of pharmacy shall provide to the financial institution all of the following information:
Whether a person with whom the financial institution is seeking to do business is a cultivator, processor, retail dispensary, or laboratory licensed under this chapter;
The name of any other business or individual affiliated with the person;
An unredacted copy of the application for a license under this chapter, and any supporting documentation, that was submitted by the person;
If applicable, information relating to sales and volume of product sold by the person;
Whether the person is in compliance with this chapter;
Any past or pending violation by the person of this chapter, and any penalty imposed on the person for such a violation.
The department or board may charge a financial institution a reasonable fee to cover the administrative cost of providing the information.
Governor Directs Department of Financial Services to Encourage New York State-Chartered Banks and Credit Unions to Provide Banking Services for New York's Regulated Medical Marijuana and Industrial Hemp Businesses
DFS Will Not Impose Regulatory Action on Any New York State-Chartered Bank or Credit Union for Establishing a Banking Relationship with a Medical Marijuana-Related Business That Complies with Federal and State Laws
https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1807031
For well capitalized, well managed institutions that currently have strong BSA programs, the act of providing banking services to marijuana-related businesses in full compliance with the Guidance will not, in and of itself, prejudice an institution to adverse regulatory treatment from the Department of Banking and Securities, provided the institution establishes and adheres to robust policies and procedures around the handling of funds pertaining to the marijuana-related business activities and the previously mentioned FinCEN guidance.
https://www.dobs.pa.gov/Businesses/Pages/Marijuana-and-Banking-Resources.aspx (12/2/19)
Boards and management teams of our state-chartered financial institutions should carefully review this guidance and discuss it with legal counsel when considering whether and how to provide banking services to I-502 compliant entities and individuals and/or whether to accept I-502 tax proceeds for transmission to the Washington State Department of Revenue. The Washington State Department of Financial Institutions and its Divisions of Banks and Credit Unions will instruct its examiners to follow the guidance when conducting examinations of state chartered financial institutions. We will be discussing this guidance with our federal regulatory counterparts and will do our best to communicate any important information those conversations may produce.
https://dfi.wa.gov/documents/banks/guidance-marijuana-related-business.pdf
"Prior to offering financial services to MRB’s, your institution must have appropriate risk management practices in place, including:
A strong understanding of applicable state and federal laws and regulations
A risk assessment that considers potential impacts to all areas of your institution
An effective audit program
Policies and procedures to effectively guide staff
A training program for staff and management
Management Information Systems to monitor trends and activities, and
A robust BSA/AML program that ensures:
Appropriate methods exist for identifying and monitoring MRB’s
Appropriate and timely monitoring for, and filing of, Suspicious Activity Reports and Currency Transaction Reports
Customers have obtained proper state and local licensure
Customers possess and maintain necessary records"
"Even if your institution doesn’t plan to offer financial services to Medical Cannabis growers or dispensaries, it is possible you will have other customers indirectly involved with Medical Cannabis, such as contractors, commercial landlords, and transportation companies. Your institution could be providing indirect services to a MRB in these situations, and you should have policies and procedures in place to guide staff and identify, monitor, and report on these customers, as appropriate."
https://dlr.sd.gov/banking/legal/documents/07-016-medical_cannibas_memo.pdf