Background Information

In the 2016 elections, Arkansans approved Amendment 6 to the Arkansas Constitution. While Arkansas may have given the green light to the medical marijuana industry, the sale and use of marijuana still is illegal at the federal level. In late June 2011, the U.S. Department of Justice issued a memo reiterating the consequences of those individuals caught cultivating, selling or distributing marijuana. The memo also includes other parties who “knowingly facilitate such activities” as targets of prosecution. The exact language in the DOJ memo reads:

“Persons who are in the business of cultivating, selling or distributing marijuana, and those who knowingly facilitate such activities, are in violation of the Controlled Substances Act, regardless of state law. Consistent with resource constraints and the discretion you may exercise in your district, such persons are subject to federal enforcement action, including potential prosecution. State laws or local ordinances are not a defense to civil or criminal enforcement of federal law with respect to such conduct, including enforcement of the CSA. Those who engage in transactions involving the proceeds of such activity may also be in violation of federal laundering statutes and other federal financial laws.

A few banks in other states with legalized marijuana had serviced medical marijuana businesses prior to directives from federal banking regulators consistent with the DOJ letter. Since that action by bank regulators, we are aware no bank continuing to knowingly bank marijuana businesses.

The only way ABA knows to deal with this is for the federal government to amend the Controlled Substances Act to create an exception to federal law For financial institutions to handle such transactions, further amendments may be needed to the USA Patriot Act, Bank Secrecy Act, and numerous other federal statutes.

News Articles

Banking and Medical Marijuana in Arkansas - It's Still Illegal

November 2016 Issue 6, titled “The Arkansas Medical Marijuana Amendment of 2016,” was approved by a majority of Arkansas voters and will amend the Arkansas Constitution to allow the use and distribution of medical marijuana. However, the first sentence of the Amendment acknowledges that “marijuana use, possession, and distribution for any purpose remain[s] illegal under federal law . . . ” Regardless of the change to the Arkansas Constitution, banks remain prohibited from offering banking services to those who operate medical marijuana dispensaries and cultivation facilities, and third parties that do business with such parties.

Marijuana and Banking

Approximately 23 states and the District of Colombia have authorized usage of marijuana for medical purposes. Of those, four states — Alaska, Colorado, Oregon, Washington and the District of Columbia — have also enacted state laws legalizing recreational marijuana. However, federal law still makes possession and use of marijuana illegal.

The Cannabis Conundrum

The changing legal landscape for marijuana use puts banks in several difficult spots.

The First Bank of Bud

With federal laws deterring banks from offering financial services to marijuana businesses, the 1,200 licensed marijuana businesses in Colorado search for an alternative.

Medical Marijuana: Considerations for Arkansas Banks

Arkansas joined twenty-eight other states that have legalized some form of marijuana since 1996. This Alert reviews the terms of 2016 Amendment 6 and particular challenges banks in Arkansas will face in considering whether to provide services to these newly legal businesses.

Implications of the Legalization of Marijuana & the Conflict Between the FinCEN/DOJ Guidance and Federal Law

Comprehensive Outline for CBA comments to Florida International Bankers Association in Miami March 2015 – along with speakers from DOJ and FinCEN

Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City

The Fourth Corner Credit Union seeks a mandatory injunction directing the Federal Reserve Bank of Kansas City to grant it a “master account.” The bank in turn asks the Court to dismiss the case.