Authored: By William F. McDevitt, Esq.

Dispensaries are expected to deliver cannabis products to certified patients by April or May 2018. Grower/processors and dispensaries soon will realize returns on their investments, subject to regulatory price controls imposed by the Medical Marijuana Act (MMA), as administered through the Department of Health and the Department of Revenue.

So, where will the money go? The MMA requires medical marijuana organizations to have a certain amount of capital on deposit with a financial institution: $500,000 for grower/processors and $150,000 for dispensaries. But the MMA does not include any other provisions related to the banking or financial industry. Licensed cannabis organizations are required to have bank accounts, but banks are not required to accept proceeds from the legal sale of marijuana.

Although the MMA was passed on April 17, 2016, the Pennsylvania Department of Banking and Securities (DOBS) has not issued any guidance on the handling of marijuana proceeds. A February 1, 2018, search of the term “marijuana” on the DOBS site at returns a single item – a January 2, 2015, DOBS newsletter indicating that “marijuana industry investments” are a “top threat” for investors in 2015. The Commonwealth’s banking and securities regulator has not issued any guidance or recommendations for handling legal marijuana revenue.

Prior to January 4, 2018, banks and credit unions in the Commonwealth relied on Guidance FIN-20014-G001 (Guidance) issued by the federal Department of the Treasury Financial Crimes Enforcement Network (FinCEN). The Guidance was expressly based on a memorandum issued by former Deputy Attorney General James M. Cole (the Cole Memorandum), directing federal agencies to focus their marijuana enforcement efforts on illegal distribution and distribution to minors, while allowing state governments to regulate cannabis-related transactions that are permissible under state law. It should be noted that the Cole Memorandum and the FinCEN guidelines were issued on the same day, February 14, 2014, reflecting the coordination between the Departments of Justice and the Treasury.

FinCEN reports that between October 2016 and September 2017, the number of depository institutions actively handling transactions from marijuana-related businesses rose from 318 to 400. Most of the increase in deposits during that period came from marijuana businesses that handling institutions determined were in compliance with state cannabis regulations and the provisions of the Cole Memorandum.

On January 4, 2018, United States Attorney General Jeff Sessions revoked the Cole Memorandum and granted greater discretion to federal prosecutors when reviewing state-legal cannabis transactions. It has been reported that Attorney General Sessions did not coordinate with FinCEN or the Department of the Treasury. FinCen has not yet revised its Guidance to Marijuana-Related Businesses. In light of the revocation of the Cole Memorandum, financial institutions now lack direction in the handling of state-legal cannabis-related revenue.

In the absence of instruction from either federal or state regulators, financial institutions in Pennsylvania will have to review the risks of deposits that are state-legal but might be the subject of federal investigation or prosecution.

About the Author

William F. McDevitt is a partner in the Philadelphia office of national law firm Wilson Elser, where he is a member of the firm’s Cannabis Law practice. He can be reached at