An official in Illinois has asked President Donald Trump for guidance on his administration’s policy on the banking industry offering services to the cannabis industry.
In a statement released in January, State Treasurer Michael Frerichs said the president’s approach to the issue could impact the future of medical marijuana in the state of Illinois. He has sent a letter to the president, asking for his guidance on the issue.
While 28 states have legalized medical marijuana and eight have legalized recreational marijuana, cannabis remains illegal at the federal level. That means working with the cannabis industry violates federal law, although federal policy under President Barack Obama took a hands-off approach.
Banks have largely stayed away from the cannabis industry. That has left most marijuana businesses operating on a cash-only basis. In the letter, Frerichs said that this has left the legal cannabis industry “with limited confidence it will not face criminal prosecution” from federal officials.
Frerichs asked Trump for some assurance that “responsible financial institutions” will not face criminal charges or penalties for offering services to state-licensed legal marijuana growers and dispensaries. He said such guidance could give marijuana businesses the confidence to move forward, and also assure medical marijuana users they can continue to buy cannabis legally.
“Medical marijuana is not right for everyone. However, its positive results for those with debilitating conditions, including veterans and children threatened by seizures, are undeniable,” Frerichs said in the statement.
“Updating our banking laws to embrace commonsense change will allow Illinois to properly manage this reasonable program, guarantee uninterrupted access to medical users, and protect financial institutions that serve the industry.”
Big banks already work with marijuana businesses.
Meanwhile, a survey of financial papers filed in Massachusetts shows that big banks are working with some cannabis companies, at least those applying to sell medical marijuana in Massachusetts. However, it’s not clear if this was a mistake on the part of the banks.
The review, done by Chicago-based MRB Monitor for American Banker, found that 29 of the 84 applicants who filed financial papers to open a medical marijuana dispensary in Massachusetts had accounts with either Bank of America, Wells Fargo, Citi or JP Morgan Chase. Of those 29, 17 had accounts with Bank of America.
MRB Monitor provides advice to banks about working with the cannabis industry. American Banker provides financial and banking news aimed primarily at banking executives.
Cannabis and banking.
For the report, filings were looked at for the period between June 2015 and September 2016. The report found that some of the applicants had used personal names to open banking accounts, which could have meant that the banks were unaware of the connection to the marijuana industry.
However, some used business names clearly connected with selling medical marijuana in other states.
“A commonly held belief seems to be that small institutions are more likely than large institutions to have marijuana-related accounts, knowingly or otherwise,” Steven Kemmerling, CEO of MRB Monitor, told American Banker. “The data seems to challenge those assumptions and raises the question of whether any financial institution is adequately prepared to identify and manage this particular risk.”
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