Pub. 9 2019-2020 Issue 1

8 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S FEATURE ARTICLE BY SILVIA GARCIA MAGGIO, DEPUTY GENERAL COUNSEL As the prevalence of marijuana businesses continues to increase, banks have to make risk- based decisions as to whether to bank them and how to determine whether their customer actually is an MRB. L ast year the most frequently asked topic over at Compliance Alliance was, without a doubt, beneficial own - ership. With the effective date for that rule well behind us, today the top BSA question we are getting is about how the heck to deal with marijuana banking. Now the issue with Marijuana Banking is that there are no set definitions and conflict between state and federal laws. Therefore, it’s important to discuss both the definitions that do exist and strategies for the bank to make their own interpretations. First, the 2018 Farm Bill clarified, from a federal perspective, that hemp cultivation is legal and not just restricted to pilot pro- grams for research purposes which it was before. Importantly, the Act also allows interstate transfer of hemp products. Also, the passage of the law allows for the sale and possession of hemp-based products, as long as those products are consistent with the parameters of that rule. So, what are the parameters? There are still tight restrictions on this type of product. Hemp under this rule is limited to less than 0.3% THC. Second, the Bill asks state departments of agriculture to create a regulatory framework that would be collaboration between the state’s governor, law enforcement and the United States De- partment of Agriculture in order to license and regulate hemp. That plan will have to be approved by the USDA so we’re not free and clear yet. Farmers in states that choose not to have a USDA-approved program will still have the opportunity to grow hemp and produce hemp-based product, but they will be regulated at the federal government level. As can be expected from those last two parame- ters, hemp producers will have to be licensed and regulated which will mean some level of enhanced due diligence for institutions that choose to bank those customers. How does any of this help us? It helps us because hemp is derived of the same plant as marijuana – the cannabis plant. However, hemp does not have the same effects as marijuana simply because it does Marijuana Banking in 2019