Week in Review: Banking Scare, Marijuana Ballot Roundup & Water Rules in California
By Omar Sacirbey and John Schroyer
An Illinois bank sparks fresh concerns about cannabis and financial institutions, the number of states with certified pro-marijuana ballot measures hits an all-time high, and California MJ growers face new water-use rules.
Heres a closer look at some notable developments in the marijuana industry over the past week.
Banking Scare?
Dont panic! Just keep good track of your business.
Thats the message a prominent Illinois attorney and former regulatory czar is telling cannabis business and banking leaders following a report that a small bank had landed in legal hot waterfor violations allegedly relating to cannabis.
In March, Millennium Bank, with onebranch in Des Plaines, Illinois, signed a consent order a voluntary agreement with court-enforceable terms with the Federal Deposit Insurance Corp. and the Illinois Division of Banking over alleged violations of the Bank Secrecy Act.
The order doesnt mention marijuana; but The American Banker, which reported the story, said a source told it the banks violations were marijuana-related.
The news could chill banks willingness to accept cannabis accounts.But it shouldnt, said Manuel Flores, a Chicago attorney who specializesin banking regulation and cannabis law.
I doubt theyre being looked at just because of cannabis. There had to be another reason. Maybe a lack of internal controls? We just dont know, said Flores, the formerActing Secretary of the Illinois Department of Financial and Professional Regulation, which regulates the states banking and medical cannabis industries. It would be wrong to jump to conclusions that make banks afraid to bank marijuana businesses.
Even if the consent order has to do with cannabis violations, regulators probably arent scrutinizing Millennium just because it had cannabis clients. Rather, contended Flores, it was more likely tied to specific violations.
A February 2014 letter from the U.S. Treasury Departments Financial Crimes Enforcement Network essentially states that banks with marijuana business accounts would be left alone as long as they meet certain compliance standards.
Since that time, there has been a dramatic increase in the number of financial institutions doing business with cannabis companies.
In March of this year, 301 financial institutions were working with marijuana companies, according to federal data obtained by the Associated Press.
That was up from just 51 in March 2014 and a three-fold increase from later that year, when an estimated 100 banks and credit unions worked with the industry.
While banks need controls to properly service cannabis businesses, these businesses can make banks lives and their own lives easier by implementing internal controls for tracking MJ inventory, purchases and patients, Flores said.
Itll allow your bank to be in a better position to serve you. Theyll be able to say, I know what safeguards my customers are taking. I can show you what theyre doing to prevent the diversion of product, Flores explained.
Ballot Roundup
Is the marijuana business at a tipping point?
Pro-cannabis campaigns in Massachusetts and Montana qualified for their respective statewide ballotsthis week, officially making 2016 possibly the biggest year ever for the marijuana movement. As of now, voters in seven states will be going to the polls this fall to consider the matter. Those states extend from the East to the West Coasts.
Pro-legalization campaigns in at least five more states are planning to submit signaturesto make the November ballot or are waiting learn whether theyll be certified to go before voters. All told, up to a dozen states could have pro-cannabis measures on the ballot related to recreational or medical MJ.
The upshot: 2016 could go down in history as the most successful and influential year in the cannabis industrys history that is, if enough voters pull the yes lever in at least seven states come Election Day.
Along with Massachusetts and Montana, the five other states with initiatives that will definitely appear on the ballot include: Arkansas, California, Florida, Maine and Nevada.
Previously, the biggest year that saw the most pro-cannabis successes was 2014, when the legislatures of Maryland, Minnesota, and New York all legalized medical marijuana. That same year, voters in Alaska, Oregon and Washington DC voters approved recreational marijuana while MMJ failed narrowly in Florida at the ballot box ...
