In an August 5, 2019 interview with the CU Times, Chairman Rodney Hood added another wrinkle to the legal/regulatory framework encasing marijuana banking when he proclaimed that Credit Unions were free to make a business decision about whether or not to offer cannabis banking services. He further explained that NCUA would not penalize these Credit Unions so long as they follow the appropriate BSA requirements along with adequately addressing safety and soundness concerns. While, the Chairman statements are welcomed, there is still much, much more that needs to be clarified when it comes to providing marijuana banking services.
First the Chairman’s comments should be followed up with a Letter to Credit Unions clarifying precisely what NCUA’s stance is. This is necessary because NCUA stance on marijuana banking has been somewhat inconsistent. For example, in 2014 it explained to Credit Unions that they would be permitted to engage in marijuana banking in states where marijuana is legal provided they followed FINCEN’s guidance on marijuana banking. But when Fourth Corner Credit Union in Colorado, a state chartered institution created specifically to provide marijuana banking services, applied for share insurance from the NCUA, the NCUA denied their request. Eventually, the Credit Union sued both NCUA and the Federal Reserve Bank of Kansas with the Credit Union settling after agreeing to very restrictive terms.
And let’s remember some core issues remain to be resolved regardless of what stance NCUA takes on the issue. Most importantly, even though Congress voted to block federal prosecutors from bringing enforcement actions against institutions providing marijuana services in states where it is legal, marijuana possession remains unequivocally illegal as a matter of Federal law. This would be true even without Jeff Sessions’ decision to revoke the Cole Memorandum, which laid out the conditions under which financial institutions would not be prosecuted for providing banking services to Marijuana related businesses. This means we are a new Treasury Secretary away from having no Federal guidance as to how marijuana services can be “legally” provided.
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