On Friday the Federal Government released updated guidelines for the medical and legalized marijuana communities' banking activities, specifically responding to one great concern of businesses in Colorado, Washington, and beyond: How does one deal with banking and keeping a legitimate business when the banks are governed under federal laws?
The specific guidelines read as follows:
"In assessing the risk of providing services to a marijuana-related business, a financial institution should conduct customer due diligence that includes: (i) verifying with the appropriate state authorities whether the business is duly licensed and registered; (ii) reviewing the license application (and related documentation) submitted by the business for obtaining a state license to operate its marijuana-related business; (iii) requesting from state licensing and enforcement authorities available information about the business and related parties; (iv) developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served (e.g., medical versus recreational customers); (v) ongoing monitoring of publicly available sources for adverse information about the business and related parties; (vi) ongoing monitoring for suspicious activity, including for any of the red flags described in this guidance; and (vii) refreshing information obtained as part of customer due diligence on a periodic basis and commensurate with the risk."
Essentially they are saying that it is up to the banks to vet each specific business on a case-by-case basis. Nevertheless, no matter how legal a business may be, both parties are no doubt open to prosecution and there are no guarantees to be had.
Banks will still be required to file "suspicious activity" reports on cannabusinesses, but the federal government will be processing the claims under special guidelines for the newly minted legal marijuana economy. All said and done, these guidelines amount to a "proceed at your own risk" message. Our prediction: these ambiguities will surely result in lawsuits down the road.
Read the full text of the documents below: