For my Illinois clients, Missouri is following behind you a couple years but the information here applies to both states.
What are the implications to banks and credit unions now that the state has legalized medical marijuana? The federal laws regulating “illegal drugs” did not change. So if your organization decides to provide services to a marijuana related business, you should know and understand the risks. As in everything we do, risk vs. reward has to be a consideration.
The Department of Justice and FinCEN both made weak attempts to provide guidance. They neither gave approval, but the DOJ said, “we are likely to be too busy to prosecute a bank to enforce drug laws”.
FinCEN did not go that far, they said, the states legalizing marijuana does not affect the institutions obligation to file a SAR and to monitoring illegal activity (federal).
So to provide them services, you are only legal in your state.
Now the question of providing ATM services, once you allow them to use your network, they cross state lines. So do you provide them on site ATM’s? Do you provide them debit cards? Do you provide them credit cards?
The dilemma continues to grow. Webster defines a dilemma as a choice between two undesirable options. That pretty well sums it up.
Here are 2 important facts to consider:
Regardless of the fact Missouri and Illinois law changed, the production and distribution of marijuana remains illegal under federal law. Therefore, your institution can face serious risks if you chose to bank the medical marijuana industry in your state.
If you decide not to bank the medical marijuana industry, you still will have to enhance your due diligence to identify businesses that indirectly receive revenue from production and sale of marijuana. For example, a business/entity renting a building to a medical marijuana business to store their product or provides security services to a medical marijuana facility. Know Your Customer goes to a new level going forward.
While this is already an issue in Illinois, Missouri won’t start allowing legal business activity until early 2019, so get ready, the question is inevitable from either your management, your employees or the public.