Interest in cannabis is at an all-time high. In 2020, Americans bought $18.3 billion in cannabis products, a $7.6 billion increase from 2019. The surging popularity of the plant is running parallel to the move towards legalized cannabis. With the removal of hemp from the CSA controlled substance list, and as ever more jurisdictions broadly legalize cannabis products (with New York being the latest), some financial institutions are finding it more compelling to “go green.” 

Commercial cannabis growers, producers, manufacturers, and sellers need access to capital and financial services to flourish in those jurisdictions where the sale of cannabis products is legal. However, because hemp has only recently been legalized, and marijuana remains federally illegal, financial institutions must navigate federal anti-money laundering laws, remaining aware that knowingly engaging in financial transactions involving proceeds generated from the sale of cannabis might be illegal, depending on whether the proceeds are derived from hemp and related products (legal) or marijuana and related products (illegal).

The Bank Secrecy Act (BSA) and its anti-money laundering implementing regulations, as well as the CSA and other federal statutes, subject financial institutions to enforcement actions and, potentially, to significant civil monetary penalties. Further, individuals found to have willfully violated the BSA are subject to civil and criminal fines of up to $250,000 per violation and/or five years in prison. As a result, financial institutions have been unable or unwilling to provide services to many cannabis-related businesses.

In this compliance guide, we provide an overview of guidance issued by federal law enforcement agencies to financial institutions addressing the provision of services to the cannabis industry consistent with their BSA obligations.

Download the guide here.

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Photo of Christopher Gismondi Christopher Gismondi

Chris Gismondi is Of Counsel in the Litigation & Regulatory Group at DLA Piper LLP (US). Chris litigates high-stakes, complex commercial and corporate governance disputes. Recently, his practice has focused on providing broad-based risk management, litigation and regulatory support to growers, financial institutions,

Chris Gismondi is Of Counsel in the Litigation & Regulatory Group at DLA Piper LLP (US). Chris litigates high-stakes, complex commercial and corporate governance disputes. Recently, his practice has focused on providing broad-based risk management, litigation and regulatory support to growers, financial institutions, manufacturers, distributors and retailers in the tobacco, vape product, and CBD/Hemp industries. He also defends corporate clients against claims for violations of the securities laws, breach of fiduciary duty, and breach of contract. He handles cases before state and federal trial and appellate courts, arbitrators, and mediators, working hand in hand with clients to develop aggressive, yet cost-effective, litigation strategies.

Wendy Michael

Wendy Michael is Senior Counsel in DLA Piper’s New York Litigation & Regulatory Group.  Ms. Michael has a wealth of experience representing large corporate clients in product liability litigation and complex commercial disputes in state and federal courts nationwide, as well as in…

Wendy Michael is Senior Counsel in DLA Piper’s New York Litigation & Regulatory Group.  Ms. Michael has a wealth of experience representing large corporate clients in product liability litigation and complex commercial disputes in state and federal courts nationwide, as well as in arbitration and other alternative dispute resolution arenas. Her practice also involves providing litigation and regulatory support to product manufacturers, particularly those in the tobacco, vaping and CBD/hemp industries.

Photo of Jeffrey Hare Jeffrey Hare

Jeffrey is the Co-Chair of the Financial Regulation and Technology service group and operates out of the firm’s Washington DC office. Jeffrey focuses his practice on federal and state banking and financial services laws and regulations.

In the financial services space, Jeffrey has…

Jeffrey is the Co-Chair of the Financial Regulation and Technology service group and operates out of the firm’s Washington DC office. Jeffrey focuses his practice on federal and state banking and financial services laws and regulations.

In the financial services space, Jeffrey has significant experience with Bank Secrecy Act and anti-money laundering compliance, chartering and conversions, investor control issues, affiliated and insider transactions, mergers and acquisitions, product development, and permissible bank and holding company activities. He represents banks and lenders as well as their holding companies and investors in day-to-day compliance matters as well as examination criticism and enforcement actions.

Specific to anti-money laundering compliance, Jeffrey has developed and advised on implementation of clients’ global programs. He has developed anti-money laundering programs for clients that are not directly subject to the Bank Secrecy Act but seek to adopt programs in order to address counter-party or bank demands, to reduce risk, or to satisfy industry expectations. He has also undertaken many comparative analyses of US anti-money laundering laws relative to those of foreign jurisdictions.

Having recently represented national trust banks in their formation and conversion, Jeffrey also has significant experience advising clients that offer trust, asset management and fiduciary services. In this regard, he has specific experience with federal preemption of state laws for trust banks and utilization of limited purpose trust companies within existing business organizations.

Further, Jeffrey has significant experience in consumer financial products, with specific focus on the Truth in Lending Act, Truth in Savings Act, Fair Credit Reporting Act, Real Estate Settlement Procedures Act, and fair lending laws. He has helped clients develop and implement compliance programs and customer disclosure materials for credit and deposit products.

With respect to non-bank clients specifically, he advises innovative payment service providers, money services businesses (including money transmitters and providers of prepaid access), vendors to banks, and retail merchants in connection with credit and debit card acceptance and co-brand agreements. Jeffrey has specific experience related to mobile payments and mobile banking and virtual currency.