Few could have predicted the consequences for banks in states where marijuana has been legalized in recent years. Currently, Colorado and Washington state allow the recreational use of marijuana, and 20 more states and the District of Columbia allow the use of marijuana for medicinal purposes.
The quandary for banks in these states is that marijuana remains illegal under federal law, even though the Justice Department has now said it will not pursue banks that do business with legalized marijuana dispensaries.
Under federal guidelines, banks are required to do their due diligence when setting up new accounts, and as such, are required to file suspicious activity reports for transactions involving marijuana businesses, even when deemed legal (for more on guidelines, see “Regulatory Forum,” page 38). Indeed, in February about $850,000 was seized from bank accounts that federal authorities said were used to illegally funnel money.
Additionally, as employers, banks’ due diligence in screening employees has become more complicated. For instance, Illinois’ Compassionate Use of Medical Cannabis Pilot Program Act expressly prohibits employers from discriminating against registered patients in the workplace based solely on their status as marijuana-using patients.
And as if that weren’t enough, the landscape promises to continue shifting with little legal precedence to guide the way. The Illinois law is a pilot program that expires at the end of 2017 unless renewed or extended by state lawmakers. What is law on Dec. 31, 2017, could become illegal again on Jan. 1, 2018. Furthermore, with regard to the banking activities of marijuana vendors, it is difficult to predict what stance the Justice Department in the next presidential administration will take. The solution, it seems, is to ask questions and stay informed.