Be Prepared for Marijuana-Related Business
As the business of medical cannabis in Maryland expands, depository institutions and non-depository lenders must grapple with whether and how to bank marijuana-related businesses (MRB). Margie Corwin presented an interactive seminar on this subject for the Maryland Bankers Association on January 23, 2018.
Attached is a checklist of issues every depository institution located in Maryland should think about. At the top is to have a board-level policy about whether the institution will affirmatively do business with MRBs, individuals affiliated with MRBs and service providers who do business with MRBs. Procedures will differ depending upon policy but, in all events, must be carefully considered and address the wide range of activities (for example, deposit taking, commercial lending, insurance coverage, third-party vendor arrangements, customer oversight, etc.) impacted by the medical cannabis industry. There is very little definitive regulatory guidance.
However, a glimpse of recent guidance is found in a February 2, 2018, letter from the Federal Reserve Bank of Kansas City (FRBKC) to the Fourth Corner Credit Union (Credit Union). The Credit Union has been fighting – for access to the FRBKC payment system and for share deposit insurance from the National Credit Union Administration (NCUA) – since 2015 in order to open for business and service the marijuana industry in Colorado.
The letter revealed that the Credit Union’s case against the FRBKC settled and the FRBKC has agreed to grant the Credit Union a master account subject to certain pre-conditions. One significant condition is that the Credit Union will not serve or service MRBs unless and until it becomes lawful under federal law to provide banking or financial services to MRBs. The Credit Union’s counsel is quoted as saying that under this limitation, MRBs are those businesses that are licensed to sell marijuana, which includes “plant-touching” businesses. Credit Union counsel explained that the limitation does not prohibit the Credit Union from providing services to “pot-adjacent” businesses, such as landlords and other service providers, that directly support the industry. The limitation also should not prohibit the Credit Union from banking employees of businesses involved in the industry.
The Credit Union dismissed its lawsuit against the FRBKC on February 5, 2018. The Credit Union’s lawsuit against the NCUA was not dismissed as a result of the agreement between the Credit Union and the FRBKC.
Please contact Christopher Rahl with any questions.