Insuring Cannabis Companies

Insuring Cannabis Companies

Insuring Cannabis Companies with Laura Bianchi, Managing Partner of Bianchi Brandt & Hale. Our next guest has been a featured guest on Cannabis Radio, including co-hosting our coverage of a historical 2016 election night. For the past decade, she has worked with cannabis and hemp-based businesses and can speak to various related topics. On Aug. 20, the National Credit Union Administration (NCUA) announced that federally insured credit unions may offer financial services to legal hemp businesses, a promising step toward legal banking for the broader cannabis industry. Although the Treasury Department has published guidelines for banks to provide services to the cannabis industry (including marijuana, hemp, and products derived from marijuana and hemp, such as CBD), financial institutions have been slow to work with businesses in the industry due to the contradictory legal status of cannabis—particularly marijuana at the state and federal level.

Insuring Cannabis Companies

With its new regulations, the NCUA, an independent federal agency that insures credit unions against bank failure (similar to the Federal Deposit Insurance Corporation), may help open the door for overt regulatory acceptance for banking in all aspects of the cannabis industry. As of March 2019, there are at least 633 depository institutions that provide financial services to the marijuana industry, the most controversial aspect of the cannabis industry from the perspective of federal law, according to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN has issued guidance as to how financial institutions servicing state-legal marijuana businesses can comply with federal regulations, but some banks are still reluctant to enter the market. This reticence is due both to the fact that it is not unambiguously legal to bank cannabis businesses generally and also due to banks’ concerns that supporting marijuana businesses while marijuana remains explicitly illegal under the federal Controlled Substances Act (CSA) can theoretically be characterized by prosecutors as aiding and abetting or money laundering. Such characterization could be the case even with respect to marijuana businesses that are otherwise legal at the state level.