Senate Bill Would Protect Banks Serving Marijuana Businesses

By Larry K. Houck –

A bipartisan group of senators representing Oregon, Colorado and Washington, states that have legalized nonmedical use of marijuana, introduced legislation that would protect financial institutions from adverse action by federal banking regulators for providing services to legal marijuana businesses.  The “Marijuana Businesses Access to Banking Act of 2015” (S. 1726), introduced July 9th, would protect depository institutions that provide financial services to marijuana-related legitimate businesses.  Senator Jeff Merkley (D-OR), a co-sponsor, observed, “The people of Oregon have spoken, and the federal government should make sure that legal marijuana businesses can operate properly within our banking system.  It’s time to let banks serve these legal businesses without fearing devastating reprisals from the federal government.”  Marijuana businesses’ lack of access to bank accounts and their inability to accept credit cards or write checks have required many to operate on a cash-only basis.

While a number of states have passed laws that conflict with federal law legalizing marijuana for medical or recreational use (see our previous post here), federal law prohibits the possession, cultivation or distribution of marijuana and prohibits anyone from operating a business for these purposes.  The Department of Justice (“DOJ”) and the Drug Enforcement Administration (“DEA”) remain committed to enforcing the federal Controlled Substances Act.  DOJ and DEA issued guidance in August 2013, and then again in February and March 2014 (see here), that outline federal enforcement priorities, noting that DOJ is unlikely to take action against a marijuana business operating in compliance with state law that does not implicate one of DOJ’s enumerated enforcement priorities.  The Department of the Treasury’s Financial Crimes Enforcement Network issued concurrent guidance in February 2014.

The bill would by prohibit federal banking regulators from:

• Terminating or limiting the deposit insurance or share insurance of a depository institution solely for providing financial services to marijuana-related legitimate businesses;
• Prohibiting, penalizing or discouraging a depository institution from offering financial services to marijuana-related legitimate businesses;
• Recommending, incentivizing or encouraging depository institutions not to offer financial services to an individual or to downgrade or cancel financial services offered to an individual solely because they are a manufacturer, producer, owner or operator of a marijuana-related legitimate business or the depository institution was unaware that the individual is the owner or operator of a marijuana-related legitimate business; or
• Taking adverse or corrective supervisory action on a loan to an owner or operator of a marijuana-related legitimate business or real estate or equipment that is leased to a marijuana-related legitimate business.

The bill would protect the depository institution, its officers, directors and employees in a state or one of its political subdivisions that allows marijuana business activities from liability under federal law or regulation solely for providing financial services or investing income derived from those services.

Lastly, the Department of the Treasury must require any suspicious activity report filed by a financial institution regarding a marijuana-based business to comply with specified guidance of the Financial Crimes Enforcement Network.

The marijuana business access bill was referred to the Committee on Banking, Housing and Urban Affairs.  The Senate Appropriations Committee passed a financial services appropriations bill which includes an amendment similar to the bill on July 23rd.  A companion bill (H.R. 2076) of the same name was introduced in the House of Representatives on April 28, 2015.