Pub. 8 2019 Issue 4

The CommunityBanker 16 F E A T U R E P anic. That is what comes to mind when I think back to when Massachusetts first legalized medical marijuana in 2012. I prided myself on being the type of Bank Secrecy Act (BSA) officer who provided “yes, but first…” respons - es when faced with new risks that were all dolled up in a “great business opportunity” dress. I despised business lines that referred to the unsung heroes of compliance as the “no department” and the place where “good ideas go to die”. But with all of the horror stories flashing across the front pages of newspapers about Colorado’s uptick in crime and pools of cash with nowhere to go, not to men- tion the blinding lack of regulatory guidance, something I depended on like air to do my job—this was a totally different ball game. Fast-forward seven years. There are now 11 states that have legalized recreational marijuana and 22 that have ap- proved the use of medical marijuana. What hasn’t changed, however, is the federal standing on marijuana as a Schedule (I) controlled substance as well as a blinding lack of regu- latory guidance. Adding more confusion to the cannabis conundrum, hemp cannabidiol (CBD) oils exploded onto the market in 2014 and have experienced exponential popularity and growth ever since. While business is certainly booming for these sectors, the banking industry has been left with more questions than answers. One promising development that may provide financial institutions with both regulatory guidance and protection for offering services to an industry fueled by funds deemed to be criminal by federal law is the Secure and Fair Enforcement (SAFE) Banking Act. The bill, which is currently sitting with the Senate after being passed by the U.S. House of Represen- tatives on September 25, 2019, aims to ensure that state-au- thorized and regulated cannabis businesses are not forced to operate as cash—only enterprises. Highlights of this legisla- tion include a safe harbor for banks that provide services to marijuana- and hemp-related businesses and the development of “uniform guidance and examination procedures” by the Financial Institutions Examination Council (FinCEN). The safe harbor protects financial institutions from prosecution, loss of insurance, and undocumented pressure from regulators to The Cannabis Conundrum By Nicole Booth