Although voters in 2008 approved the Michigan Medical Marihuana Act and the legislature passed the Medical Marihuana Facilities Licensing Act in 2016, Michigan cannabis businesses continue to struggle with having virtually no banking services available to efficiently conduct their operations.
The United States Department of Justice and the United States Treasury’s Financial Crimes Enforcement Network (FinCEN) issued guidelines indicating that banks will not likely face enforcement action in states with strong marijuana regulations. However, many banks will not provide services to cannabis businesses because cannabis remains a prohibited Schedule I controlled substance under the federal Controlled Substances Act.
To address the dangers imposed by large cash transactions, a bipartisan bill has been introduced in the United States House of Representatives called the Secure and Fair Enforcement Banking Act (SAFE Banking Act). A bipartisan companion bill has been introduced in the United States Senate. According to Colorado Senator Cory Gardner, a co-sponsor of the SAFE Banking Act, the legislation would prevent federal banking regulators from:
• Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or to an associated business (such as a lawyer or landlord providing services to a legal cannabis business).
• Terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned cannabis business or associated business.
• Recommending or incentivizing a bank to stop providing any kind of banking services to these businesses.
• Taking any action on a loan to an owner or operator of a cannabis-related business.
The bill also creates a safe harbor from criminal prosecution, liability and asset forfeiture for banks who provide financial services to legitimate, state-sanctioned cannabis businesses, while maintaining banks’ right to not offer those services. Lastly, the bill would require banks to comply with current FinCEN guidance, while at the same time allowing FinCEN guidance to be streamlined over time as states and the federal government adapt to legalized medicinal and recreational cannabis policies.
Until the federal government clarifies banking policies, cannabis businesses will continue to manage piles of cash or engage companies who can help them comply with cannabis regulations and reduce cash transactions.
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