It has been a year since the state’s financial regulator issued “guidance” to New York-chartered banks and credit unions to encourage them to offer products and services to medical marijuana companies.
The problem is, while growing and selling marijuana for the treatment of specific maladies is legal in New York, it is still illegal under federal law because marijuana is classified as a Schedule 1 narcotic.
That puts financial institutions in a bind: Handle the cash associated with cannabis transactions – it’s a mostly cash business – and face potential prosecution for money laundering.
New York banks and credit unions aren’t alone in this gray area – institutions nationwide are in a similar bind as marijuana for medical and recreational use becomes legal in more and more states.
So New York tried its hand at remedy in a memorandum issued last summer by the Department of Financial Services. In addition to detailing the federal and state legal and regulatory landscapes, the memo made a case for “taking the legal cannabis industry out of the shadows” by providing access to banking services.
The department promised that for the banks and credit unions it oversees, those that followed federal Bank Secrecy Act guidelines on reporting suspicious activities would not be subject to “any regulatory action [by the department] … solely for establishing a banking relationship with a medical marijuana-related business that operates a compliant business in New York.”
It’s hard to say whether any New York banks or credit unions took the memo to heart.
Asked this week how many, if any, institutions initiated banking services for medical marijuana businesses as a result, a department spokesman said that no “official assessment of the issued guidance” has occurred.
“This is an evolving area that requires multiple levels of coordination,” the spokesman replied by email. “[The department] continues to work closely with its regulated institutions to encourage solutions for the industry.”
The New York Credit Union Association indicated this week it was aware that some credit unions were interested in serving the cannabis sector. “But for many, there is far too much legal ambiguity” despite last summer’s state guidance, said William Mellin,
president and CEO of the trade group. He said federal legislation, known as the Secure and Fair Enforcement (SAFE) Banking
Act, could help.
SAFE Banking would protect financial institutions that offer services to state-legal cannabis businesses while Congress works on the broader issue of national drug policy, according to the CEOs of the leading national bank and credit union trade groups, who
The magazine Governing reported that at the first hearing last week on the Senate version of the bill, some “crucial” support was won from formerly unenthusiastic lawmakers.
Combined with a steady collection of co-sponsors for the companion House bill, the legislation is showing more momentum than ever before, the magazine reported.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]