Pub. 12 2021 Issue 2

Pub. 12 2021 I Issue 2 Summer 23 West Virginia Banker with MRBs and other cannabis-related businesses. In anticipation of updates to beneficial ownership procedures, additional training and reviewing practical ownership requirements can alleviate the stress of whether all necessary information was obtained before account opening. Internal updates to CIP may be as simple as implementing a questionnaire where the prospective customer attests to the nature of their business. The questionnaire may include the following: • Have the customer identify under which tier their business falls. • Have the customer disclose if any of their revenue is generated from sales or manufacturing of THC products. • Require the customer to attest to the level of THC in their products to assist financial institutions in identifying MRBs, HRBs or CRBs. • Dates and signatures on these questionnaires will substantiate pertinent information before account opening. • The opening of an account is just the beginning, as ongoing monitoring and Suspicious Activity Report (SAR) submissions will need to be conducted for the totality of the relationship. • Despite the rescinding of the Cole Memo in 2018, it is still used as an evaluation standard for filing the three MRB- related SARs. • Marijuana Limited SAR: An MRB does not raise any red flags outlined in the Cole Memo nor violate state law. • Marijuana Priority SAR: An MRB may raise red flags outlined in the Cole Memo or it may violate state law. • Marijuana Termination SAR: An MRB raised red flags outlined in the Cole Memo or violated state law. SARs for MRBs still need to be completed if the state legally licenses the business. The 2018 Farm Bill made hemp no longer a Schedule 1 controlled substance. With hemp’s demotion came issued guidance stating SARs no longer would need to be filed on hemp-related business solely due to the nature of their business. While it is up to each financial institution to determine whether they want to take the risk of banking cannabis, your policies and monitoring procedures addressing your stance will need to be made tangible. Possible future federal protections and West Virginia looking to generate more tax revenue should highlight the need for financial institutions to proactively take the steps now to prepare for this rapidly evolving industry.  Gwyneth LoCascio is a Senior Associate at Arnett Carbis Toothman, LLP with over four years of experience in public accounting. Ms. LoCascio’s direct experience in servicing financial institutions includes financial statement audits, internal audits, loan review and regulatory compliance consulting. Ms. LoCascio can be reached at (304) 346-0441 or gwyneth.locascio@actcpas.com .