#marijuana-related businesses or MRBs

[cannabisbusinessexecutive]

Why the SAFE Banking Act Still Stinks: Third Try Falls Short

By Steven Schain While preferable to its predecessors, the SAFE Banking Act fails to provide legal marijuana growers, processors, transporters or sellers (marijuana-related businesses or MRBs) with the access to banking that every other legitimate industry enjoys. Is the third time a charm? Following failed 2019 and 2021 attempts, both the House of Representatives and Senate reintroduced the…

[fatleafnews]

// CEO of EventHi, Ali Fakhri discusses where Islam & Cannabis collide & overcoming the stigma ... This episode of Joint Ventures Radio has Sean Eubanks interviewing innovative CEO Ali Fakhri of EventHi, which is an online event management platform catering to the cannabis industry. EventHi is also one of the few in California who received an MRB (Marijuana Related Business) bank account which means their platform is legally allowed to transact via ACH and credit card. Mr. Fakhri is connecting social, business, and networking minded people & groups in the cannabis space. EventHi has been receiving a tone of media coverage including most recently being featured in Culture Magazine, Forbes, Direct Cannabis Network, ABC News, and The Sacramento Bee. audio only is available here https://ift.tt/2ELFb3D

[janepwilliams87]

Fewer Banks Working With Marijuana Business Clients Amid Coronavirus, New Federal Report Shows

The number of financial institutions servicing the marijuana industry declined again over the last fiscal quarter, new federal data shows, though there seem to be multiple factors behind that trend.

The Financial Crimes Enforcement Network (FinCEN) reported last week that 695 banks and credit unions were working with state-legal cannabis businesses as of the end of June. That’s down from 710 in the previous quarter, which itself represented a dip from prior numbers.

A quick glance at the new government chart might make it seem that banks are significantly less willing to take on marijuana accounts of late. But it should be noted that FinCEN, which is part of the Treasury Department, stopped including hemp-only businesses in their quarterly reports since the crop was federally legalized under the 2018 Farm Bill—which accounts for at least part of the dip as compared to prior figures that counted hemp-focused accounts.

Via FinCEN.

So what’s behind the more recent downward trend that continues even past the hemp-related accounting switch?

According to the agency, “the COVID-19 pandemic may be adding to this apparent decline” and some marijuana companies “have likely been closed during this time period, due to government imposed quarantine restrictions.”

That said, most states allowed cannabis companies to continue to operate as essential services amid the coronavirus pandemic—and states like Illinois are seeing record sales in recent months.

Another potential reason could be that banks have been understaffed, causing delays in filing required suspicious activity reports (SAR) for marijuana businesses.

Via FinCEN.

Under FinCEN guidance issued by the Obama administration in 2014 that remains in effect, banks and credit unions are required to submit SARs if they elect to provide financial services to marijuana businesses. In the years since, the number of depositories taking on marijuana clients has gradually increased—until this more recent downward trend.

“Short-term declines in the number of depository institutions actively providing banking services to marijuana-related businesses (MRBs) may be explained by filers exceeding the 90 day follow-on Suspicious Activity Report (SAR) filing requirement. Several filers take 180 days or more to file a continuing activity report,” the new FinCEN report states. “After 90 days, a depository institution is no longer counted as providing banking services until a new guidance-related SAR is received.”

The modest decline comes as the congressional push to reform federal marijuana laws strengthens. For example, House leadership included cannabis banking protections in their latest version of COVID-19 relief legislation—though that’s drawn the ire of many GOP lawmakers, including Senate Majority Leader Mitch McConnell (R-KY), who challenge its germaneness.

A group of Democratic state treasurers last month renewed its call for the passage of banking protections as part of the next coronavirus package in the face of these attacks.

Meanwhile, the standalone Secure and Fair Enforcement (SAFE) Banking Act cleared the House last year but has sat in the Senate Banking Committee in the months since, without a clear timeline for action.

Separately, a much more comprehensive piece of reform to federally legalize cannabis—the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act—is set to receive a floor vote later this month. Removing marijuana from the Controlled Substances Act would quickly resolve uncertainty in the banking sector as to whether institutions can work with businesses in the industry.

These developments could lend themselves to higher numbers of banks and credit unions servicing the market down the line, but that’s yet to be seen.

The National Credit Union Administration issued a memo in June explaining issues related to providing financial services to hemp businesses and clarifying that such activity is lawful since the crop was legalized.

Congressional Bill Would Allow CBD And Other Hemp Compounds To Be Sold As Dietary Supplements

The post Fewer Banks Working With Marijuana Business Clients Amid Coronavirus, New Federal Report Shows appeared first on Marijuana Moment.

from Updates By Jane https://www.marijuanamoment.net/fewer-banks-working-with-marijuana-business-clients-amid-coronavirus-new-federal-report-shows/

[cannabisresins]

The cannabis industry did in 2017, after virtually no bank would accept legalized marijuana sales deposits. Due to difficulty in obtaining financial services and because marijuana is a “cash only” business, marijuana related businesses (MRBs) face staggering safety, security and operational issues. Read More...

[oscin]

SIX hat jetzt auch eine feine Nase für Marihuana https://www.moneytoday.ch/news/six-hat-jetzt-auch-eine-feine-nase-fuer-marihuana/ Der Schweizer Finanzdatenanbieter SIX lanciert einen Datenservice für Marihuana-Finanzinstrumente. Mit dem Sanctioned Securities Monitoring Service (SSMS) überprüft SIX seit einiger Zeit sanktionierte Domizile, Organisationen und Wertpapiere. Im Rahmen dieses Monitorings schafft der Finanzdatenanbieter zusätzlich einen Watchlist-Service MRB Securities – ein Service, der aktuell bereits über 30‘000 Finanzinstrumente (Wertpapiere) im Zusammenhang mit Unternehmen im Marihuanageschäft (Marijuana Related Businesses, kurz "MRB") abdeckt. Warum es notwendig ist Finanzinstitute und Compliance-Spezialisten sind gezwungen, sich mit MRB auseinanderzusetzen, aufgrund von unterschiedlichen Rechtslagen. Beispiel USA: In den USA wurde Marihuana in einigen Staaten legalisiert, bleibt jedoch auf Bundesebene nach wie vor strafbar. Das heisst konkret: MRB sind in einigen Staaten in der Lage, Finanzmittel über die Kapitalmärkte zu beschaffen, was es Investoren ermöglicht, erstmals Zugang zu MRB-bezogenen Wertpapieren zu erhalten. Das schafft Rechtsunsicherheit im Zusammenhang mit Anlagen und Portfolios. (hier: Switzerland) https://www.instagram.com/p/B09QezPAbit/?igshid=1jvri9cvma1rh

[mytechmag]

The Hypur Comply CaaS model puts financial institutions in a continuously proactive, not reactive environment through access to the Marijuana-Related Businesses (MRB) transactions. Know more about how Hypur is making banking easier for cannabis industry!

[lucriasafinancial]

CBD Banking Troubles

Thirty-three states have loosely legalized marijuana, and 11 have adopted expansive laws for its recreational use. And yet marijuana-related businesses (MRBs) still face challenges finding financial institutions that will service them.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

[moneyhealthfinance-blog]

Analytics project shows promise for resolving pot-banking issues

Analytics project shows promise for resolving pot-banking issues

Marijuana habits are pretty predictable.

Poorer young people tend to smoke pot, while older consumers tend to use concentrated products like vape pens and edibles.

While that conclusion may not be shocking, it’s based on reams of proprietary data examined by NCS Analytics, a Denver-based firm that is building a data portal between banks, two states and marijuana-related businesses (MRBs) that…

[growlegalweed-blog]

Legal Weed Resources

Check out... https://legalweed.gq/420/wilmer-hale-publish-article-developments-in-the-marijuana-industry-and-the-implications-for-financial-institutions/

Wilmer Hale Publish Article: “Developments in the Marijuana Industry and the Implications for Financial Institutions”

Here’s the introduction

Full article at

https://www.wilmerhale.com/en/insights/client-alerts/20190207-developments-in-the-marijuana-industry-and-the-implications-for-financial-institutions

  The myriad—and conflicting—state, federal and international laws governing the burgeoning marijuana industry have created a complicated legal landscape for financial institutions. In the United States, most states have legalized some form of marijuana use, but the manufacture, sale and distribution of marijuana nevertheless remains illegal under federal law. As a result, in providing financial products and services to US marijuana-related businesses (MRBs), a financial institution could risk violating the Controlled Substances Act (CSA), 21 U.S.C. § 841. Moreover, engaging in or facilitating transactions that contain proceeds from US marijuana sales could create liability under the money laundering laws. 

Further complicating matters, Canada became the first major world economy to legalize recreational marijuana in October 2018. Because the US narcotics laws generally do not apply to activity that is legal abroad, providing financial products and services to Canadian MRBs would not violate the CSA or implicate the US money laundering laws. However, that is not the case in many European countries. The European Union recently passed a law expanding the extraterritorial scope of member countries’ money laundering laws with respect to certain narcotics-related offenses. These laws could now criminalize the transfer of funds from activity that is legal in the foreign country (e.g., marijuana sales in Canada) if that activity would be illegal in the home country. 

Below we discuss the fragmented legal and regulatory landscape governing the marijuana industry as well as notable recent developments and their implications for global financial institutions.

….

[cannabisbusinessexecutive]

Will the Corporate Transparency Act Smother the Cannabis Industry?

Mandating “true owners’ identity disclosure” to prevent using shell companies to conceal criminal revenue, the Corporate Transparency Act creates myriad cannabis industry headaches. By Steve Schain Mandating “true owners’ identity disclosure” to prevent using shell companies to conceal criminal revenue, the Corporate Transparency Act, 31 U.S.C. Section 5336, et. seq. (CTA) creates…

[irenewilcox]

Workers’ Compensation. The Catch 22 in the Legal Cannabis Industry

99 Problems and Cash is King

The legal cannabis industry is slowly making its way across the ballot boxes of the nation turning the tides on whether or not you consider this organically grown plant a taboo anymore. Entrepreneurs, both young and old, flock by the masses to break ground in States such as Washington, D.C., Colorado, California and, newest to the list, Vermont hoping to get rich off of this booming new industry. With so much popularity, while still being federally illegal, the road to legalization hasn’t been easy, to say the least. One of the biggest thorns in the side of each respectable dispensary owner and marijuana grower is: cash..lots and lots of cash. At first you may begin to wonder, but then the realization sets in. Because Marijuana is till federally listed as being illegal, federal banks will not accept cash from dispensary owners or growers because it would then be considered money laundering in the eyes if the federal government. But wait.. the States deem it legal so why won’t the banks comply in those states? Well, there is the thing called the Federal Deposit Insurance Corporation or FDIC that preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000. This is what the banks and credit unions don’t want to lose due to them accepting money from a business or ancillary that profits off the sale of cannabis. So thus the problem of cash was born. Owners are dealing with a dangerous amount of loose cash of which no banks will accept.

The Cole Memos

Back in 2013 and 1014, Deputy Attorney General, James M. Cole released two separate, but similar, memos in regards the the growing cannabis industry. The first, dated August 29, 2013, addressed the Guidance Regarding Marijuana Enforcement. This memo reassured Credit Unions that as long as they followed eight specific enforcement priorities listed in the memo, that their institution would not be jeopardized. The memo goes over each guideline on how, why and when t is enforced, now, based on that credit union that deals with a Cannabis Related Business or MRB. The second memo, released on February 14, 2014 addresses the Guidance regarding Marijuana Related financial Crimes. Now, this memo is meant to reinforce the first memo released in 2013. This memo gives credit unions guidance on how to report on accounts that are linked to MRBs. Banks can now report to the Financial Crimes Enforcement Network or FinCEN through the use of Suspicious Activity Reports or SARs. SARs are reported based on the activity of the account that relates to the information from that account linked to the MRB. A “Marijuana Termination” SAR is when a financial institution deems it necessary to terminate a relationship with a MRB in order to maintain an effective anti-money laundering compliance program. A “Marijuana Priority” SAR is when a financial institutional as a reason to believe that, based on extreme vetting, a MRB implicates one or more of the Cole Memo priorities or if they are in violation of state law. Lastly, “Marijuana Limited” SAR is the report you want to receive if you still want to keep your account with that bank. This SAR indicates that the MRB is in compliance with all Cole Memo and Sate laws. Now knowing this, we being to breath a little easier knowing there may be some relief in the future of MRBs banking with federally insured financial institutions..well guess again.

Class is in Sessions

Fast forward to today and we have a new memo with a new Attorney General: Jefferson B. Sessions. AG. Sessions, has always taken a hard stance on drugs even early in his political career so it is to no surprise that he wants to roll back the progress on the legal cannabis industry. He first made his debut by releasing his one Memo dated January 4, 2018. The half page memo addresses Marijuana Enforcement and directly rescinds, effective immediately, both Cole Memos and any other memorandums that were in favor of the legal cannabis industry. This was a blow to the cannabis industry but it was a foreseen blow so the mourning was already finished and entrepreneurs alike were already working on new solutions for their cash problem. Meanwhile States that still have instilled laws allowing the sale of medical and recreational cannabis are ready to take the first wave of dispensary and grower applicants looking to file by February 15, 2018 in order to be accepted to receive a license to dispense or grow.  Insurers, Security Corporations, and HR regulation organizations are looking to cash in on the many mandated services required by the Sate in order to be accepted to receive a license. For instance, growers must have a security system installed and in operation, including a burglar alarm that reports to an outside monitoring station. Also required is a TL-15 or ½ ton safe bolted to the floor (if less than 900 lbs) and motion detectors must be installed in the safe room location. Given all of this, the State also requires that the applicant be insured and this is where things get interesting.

The Catch 22

Insurance coverage requirements can include and are not limited to: workers’ compensation, business interruption, theft, products liability, cargo insurance, BOP coverage, equipment breakdown, and cyber liability – particularly for those medical marijuana dispensaries that store patients’ personal information. In Michigan we know that workers’ compensation and general liability are required by the sate to have bin place before your application is filed. Here is where the catch is, general liability can be easily quoted and put into motion but worker’s compensation cannot. Due to this industry not being able to facilitate payroll because of no banking options, workers comp (as it is often abbreviated) can not be applied. In order to figure out how much to charge for workers’ comp you must have payroll. Whats even stranger is that Michigan has two separate class codes for workers’ compensation, one for growers and one for dispensaries. So, to recap, workers’ comp class codes exist but cannot be facilitated since MI financial institutions will not let MRBs have bank accounts. This is what has been the ongoing headache for growers, dispensaries, and all of the ancillary businesses who encounter trouble when dealing with the abundance of loose cash continuing to pile up.

How PEOs can Change the Game

Apart from the Federal Government, the States that are progressing with the cannabis industry are starting to see financial institutions accept business from MRBs but they are rare to come by. The few that do bank with MRBs charge substantial premiums for all of their due diligence for that account. Almost all of that is to prevent any one of the eight priorities that were listed in the Cole Memos back in 2013 and 2014. Since these MRBs are going directly to these financial institutions there is no firewall or “buffer” of security/vetting between the MRB and the financial institution. This is where a PEO (Professional Employer Organization), like Champion Employment, can be that ancillary business, or firewall, between the financial institution and the MRB. Champion offers services that can help ease the mind of the financial institution willing to accept money from a vetted and state-law abiding MRB. Since the only money being deposited from the MRB will be pulled by Champion to facilitate payroll, the bank can feel more at ease that they are not using that account solely to store their profits. This money would be to pay not just their employees but also the state and federal taxes as well as employee benefits and, of course, worker’s compensation. This can be a full proof method of not only solving the banking issue with a lot of these MRBs but also adding to the economy by following through and paying all appropriate taxes and fees associated with running a profitable business. Employees would not be able to grow their credit and have direct deposit, business owners would see decreased employee turnover and an increase in overall growth while at the same time making sure that these MRBs are 100 percent compliant when it comes to governmental and state regulations in this budding cannabis industry.

The post Workers’ Compensation. The Catch 22 in the Legal Cannabis Industry appeared first on Champion Insurance Agency.

Workers’ Compensation. The Catch 22 in the Legal Cannabis Industry posted first on http://champion-ia.com

[janepwilliams87]

Number Of Banks Reporting Marijuana Business Clients Declines, Federal Report Shows

The number of banks and credit unions servicing marijuana businesses dipped in the last fiscal quarter, according to new federal data.

That said, the Financial Crimes Enforcement Network (FinCEN) is no longer counting financial institutions that work with hemp-only companies since the crop was federally legalized, making the overall decline seem more pronounced compared to past quarters.

In the quarter ending in March 2020, there were 710 banks and credit unions that reported servicing marijuana businesses, according to the update that FinCEN, which is part of the Treasury Department, published this week. The previous quarter’s data showed 739 instances of financial institutions working with the industry as of December 2019.

In both of those reports, analysts identified instances where banks were filing suspicious activity reports, or SARs, for companies that only dealt with legal hemp and excluded them from the updates.

Of the 203 financial institutions that “indicated that they were providing banking services to hemp-related businesses,” 142 also worked with marijuana companies so they were kept in the report. But that means 61 hemp-only businesses were left out, unlike in past quarters. That’s the same number that were excluded from the end-of-2019 report, meaning that 29 fewer banks reported maintaining marijuana accounts at the end of March as compared to three months earlier.

Via FinCEN.

Under FinCEN guidance issued by the Obama administration in 2014 that remains in effect, banks and credit unions are required to submit SARs if they elect to provide financial services to marijuana businesses. In the years since, the number of depositories taking on marijuana clients has gradually increased—with the exception of this more recent downward trend.

When breaking down the latest data between types of financial institutions, FinCEN reports that the number of banks working with marijuana businesses is on a decline, while credit unions seem to be gradually welcoming more cannabis clients.

Via FinCEN.

“Short-term declines in the number of depository institutions actively providing banking services to marijuana-related businesses (MRBs) may be explained by filers exceeding the 90 day follow-on Suspicious Activity Report (SAR) filing requirement,” FinCEN said. “Several filers take 180 days or more to file a continuing activity report. After 90 days, a depository institution is no longer counted as providing banking services until a new guidance-related SAR is received.”

A spokesperson for the Credit Union National Association (CUNA), which has pushed for congressional legislation to protect financial institutions that service the marijuana industry, told Marijuana Moment that there are multiple factors such as delayed SARs filing that could account for the overall decline shown in the new numbers.

That said, CUNA has “heard of no specific trends that would explain it.”

Last year, FinCEN and other federal regulators issued guidance clarifying clarified that because hemp was federally legalized, banks are no longer required to automatically submit SARs for businesses that produce, process or sell the crop and products derived from it.

“The guidance states that because hemp is no longer a controlled substance under federal law, banks are not required to file SARs on these businesses solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations,” FinCEN said in this latest update. “The guidance further notes that for hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants.”

Some in the industry expected to see a sizable spike in the number of banks that work with marijuana firms after the House of Representatives passed a bill last year that would protect financial institutions from being penalized for doing so by federal regulators. Even though the legislation has stalled in the Senate and has not yet been enacted into law, the bipartisan margin of support it got in the House has been seen as a signal that formal federal changes are likely on the way.

Morgan Fox, media relations director for the National Cannabis Industry Association, told Marijuana Moment that the new FinCEN report is “certainly disappointing to see.”

“I suppose there could be several factors at play, the biggest of which would probably be market contraction because of the economic downturn and risk-aversion on the part of banks,” he said. “I think the latter could be attributed to both the pandemic and the fear of potentially getting wrapped up in an antitrust investigation or something similar (since word of those investigations was making the rounds a couple months ago and created some nervousness in the industry).”

“Regardless of the causes, the effect is detrimental to cannabis businesses that are already struggling and is just one more reason the Senate must approve banking reform without delay,” he said.

House Democrats passed the cannabis banking legislation a second time last month as part of a coronavirus relief bill. As with the standalone marijuana financial services legislation, the Republican-controlled Senate has not followed suit.

Bipartisan Lawmakers Push Marijuana Reform In Floor Debate On Policing Overhaul Bill

The post Number Of Banks Reporting Marijuana Business Clients Declines, Federal Report Shows appeared first on Marijuana Moment.

from Updates By Jane https://www.marijuanamoment.net/number-of-banks-reporting-marijuana-business-clients-declines-federal-report-shows/

[juanitafinlayson]

Workers’ Compensation. The Catch 22 in the Legal Cannabis Industry

99 Problems and Cash is King

The legal cannabis industry is slowly making its way across the ballot boxes of the nation turning the tides on whether or not you consider this organically grown plant a taboo anymore. Entrepreneurs, both young and old, flock by the masses to break ground in States such as Washington, D.C., Colorado, California and, newest to the list, Vermont hoping to get rich off of this booming new industry. With so much popularity, while still being federally illegal, the road to legalization hasn’t been easy, to say the least. One of the biggest thorns in the side of each respectable dispensary owner and marijuana grower is: cash..lots and lots of cash. At first you may begin to wonder, but then the realization sets in. Because Marijuana is till federally listed as being illegal, federal banks will not accept cash from dispensary owners or growers because it would then be considered money laundering in the eyes if the federal government. But wait.. the States deem it legal so why won’t the banks comply in those states? Well, there is the thing called the Federal Deposit Insurance Corporation or FDIC that preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000. This is what the banks and credit unions don’t want to lose due to them accepting money from a business or ancillary that profits off the sale of cannabis. So thus the problem of cash was born. Owners are dealing with a dangerous amount of loose cash of which no banks will accept.

The Cole Memos

Back in 2013 and 1014, Deputy Attorney General, James M. Cole released two separate, but similar, memos in regards the the growing cannabis industry. The first, dated August 29, 2013, addressed the Guidance Regarding Marijuana Enforcement. This memo reassured Credit Unions that as long as they followed eight specific enforcement priorities listed in the memo, that their institution would not be jeopardized. The memo goes over each guideline on how, why and when t is enforced, now, based on that credit union that deals with a Cannabis Related Business or MRB. The second memo, released on February 14, 2014 addresses the Guidance regarding Marijuana Related financial Crimes. Now, this memo is meant to reinforce the first memo released in 2013. This memo gives credit unions guidance on how to report on accounts that are linked to MRBs. Banks can now report to the Financial Crimes Enforcement Network or FinCEN through the use of Suspicious Activity Reports or SARs. SARs are reported based on the activity of the account that relates to the information from that account linked to the MRB. A “Marijuana Termination” SAR is when a financial institution deems it necessary to terminate a relationship with a MRB in order to maintain an effective anti-money laundering compliance program. A “Marijuana Priority” SAR is when a financial institutional as a reason to believe that, based on extreme vetting, a MRB implicates one or more of the Cole Memo priorities or if they are in violation of state law. Lastly, “Marijuana Limited” SAR is the report you want to receive if you still want to keep your account with that bank. This SAR indicates that the MRB is in compliance with all Cole Memo and Sate laws. Now knowing this, we being to breath a little easier knowing there may be some relief in the future of MRBs banking with federally insured financial institutions..well guess again.

Class is in Sessions

Fast forward to today and we have a new memo with a new Attorney General: Jefferson B. Sessions. AG. Sessions, has always taken a hard stance on drugs even early in his political career so it is to no surprise that he wants to roll back the progress on the legal cannabis industry. He first made his debut by releasing his one Memo dated January 4, 2018. The half page memo addresses Marijuana Enforcement and directly rescinds, effective immediately, both Cole Memos and any other memorandums that were in favor of the legal cannabis industry. This was a blow to the cannabis industry but it was a foreseen blow so the mourning was already finished and entrepreneurs alike were already working on new solutions for their cash problem. Meanwhile States that still have instilled laws allowing the sale of medical and recreational cannabis are ready to take the first wave of dispensary and grower applicants looking to file by February 15, 2018 in order to be accepted to receive a license to dispense or grow.  Insurers, Security Corporations, and HR regulation organizations are looking to cash in on the many mandated services required by the Sate in order to be accepted to receive a license. For instance, growers must have a security system installed and in operation, including a burglar alarm that reports to an outside monitoring station. Also required is a TL-15 or ½ ton safe bolted to the floor (if less than 900 lbs) and motion detectors must be installed in the safe room location. Given all of this, the State also requires that the applicant be insured and this is where things get interesting.

The Catch 22

Insurance coverage requirements can include and are not limited to: workers’ compensation, business interruption, theft, products liability, cargo insurance, BOP coverage, equipment breakdown, and cyber liability – particularly for those medical marijuana dispensaries that store patients’ personal information. In Michigan we know that workers’ compensation and general liability are required by the sate to have bin place before your application is filed. Here is where the catch is, general liability can be easily quoted and put into motion but worker’s compensation cannot. Due to this industry not being able to facilitate payroll because of no banking options, workers comp (as it is often abbreviated) can not be applied. In order to figure out how much to charge for workers’ comp you must have payroll. Whats even stranger is that Michigan has two separate class codes for workers’ compensation, one for growers and one for dispensaries. So, to recap, workers’ comp class codes exist but cannot be facilitated since MI financial institutions will not let MRBs have bank accounts. This is what has been the ongoing headache for growers, dispensaries, and all of the ancillary businesses who encounter trouble when dealing with the abundance of loose cash continuing to pile up.

How PEOs can Change the Game

Apart from the Federal Government, the States that are progressing with the cannabis industry are starting to see financial institutions accept business from MRBs but they are rare to come by. The few that do bank with MRBs charge substantial premiums for all of their due diligence for that account. Almost all of that is to prevent any one of the eight priorities that were listed in the Cole Memos back in 2013 and 2014. Since these MRBs are going directly to these financial institutions there is no firewall or “buffer” of security/vetting between the MRB and the financial institution. This is where a PEO (Professional Employer Organization), like Champion Employment, can be that ancillary business, or firewall, between the financial institution and the MRB. Champion offers services that can help ease the mind of the financial institution willing to accept money from a vetted and state-law abiding MRB. Since the only money being deposited from the MRB will be pulled by Champion to facilitate payroll, the bank can feel more at ease that they are not using that account solely to store their profits. This money would be to pay not just their employees but also the state and federal taxes as well as employee benefits and, of course, worker’s compensation. This can be a full proof method of not only solving the banking issue with a lot of these MRBs but also adding to the economy by following through and paying all appropriate taxes and fees associated with running a profitable business. Employees would not be able to grow their credit and have direct deposit, business owners would see decreased employee turnover and an increase in overall growth while at the same time making sure that these MRBs are 100 percent compliant when it comes to governmental and state regulations in this budding cannabis industry.

The post Workers’ Compensation. The Catch 22 in the Legal Cannabis Industry appeared first on Champion Insurance Agency.

Workers’ Compensation. The Catch 22 in the Legal Cannabis Industry published first on http://champion-ia.com

[tragicbooks]

Why guidelines regulating legal cannabis businesses may be doing more harm than good.

<br>

Matt Walstatter fell into the cannabis business like many people do; he got sick. Really sick.

In 2003, a bad case of flu and pneumonia turned into painful gastrointestinal symptoms that wouldn't go away. For 10 years he vomited every day. He lost 50 pounds in the first six months.

After trying everything and seeing multiple doctors, acupuncturists, and naturopaths, cannabis was the only thing that provided relief. He applied for the Oregon Medical Marijuana Program to grow cannabis for himself and soon started growing for others. For nearly three years, he's run Pure Green dispensary in Portland, Oregon.

A "budtender" helps a customer at Pure Green dispensary (left). Walstatter (right). Photos via Matt Walstatter, used with permission.

As much as he enjoys his new career, it's not without challenges.

"I liken operating a cannabis business to running with ankle weights," Walstatter says, "because everything is a little harder."

Medical and recreational marijuana are legal in Oregon but not at the federal level, putting businesses like Walstatter's at odds with the government and the financial industry.

Cannabis-related businesses operate in a challenging limbo, able to grow, produce, and sell products but bound by piecemeal rules and regulations. Since marijuana is still an illegal Schedule I substance at the federal level (grouped together with the likes of heroin, LSD, and ecstasy), providing banking services for these entrepreneurs violates multiple federal statutes and laws including the Controlled Substance Act, the Bank Secrecy Act, and even the Patriot Act.

A vendor weighs buds for card-carrying medical marijuana patients at Los Angeles' first-ever cannabis farmer's market. Photo by Frederic J. Brown/AFP/Getty Images.

This means cannabis businesses often have to operate without routine banking services like checking accounts, payroll assistance, or credit cards and instead work entirely in cash.

"The biggest hassle is paying bills. Instead of just writing a check and being done with it, you have to walk and drive somewhere," Walstatter says. "Money moves from place to place, but most of the time it happens electronically. But when you don’t have a bank account, if you want money to get from point A to point B, you’ve gotta bring it there yourself.”

But it's more than an issue of inconvenience, it's a matter of feeling safe.

"You’re always at risk," says Sally Alworth, co-owner of Luminous Botanicals, a Portland-based company that makes natural medicinal cannabis serums. "Anybody who looks around and sees where you’re located and that you’re a cannabis business knows that you likely have a stockpile of cash on site, and even if it’s in a safe, it just feels like you’re a target. There’s a big bull's-eye on you."

And while dispensary robberies are rare, they do occur. In Portland last August, a dispensary owner was robbed, bound, and held at gunpoint in his own store. It's enough to keep proprietors on edge.

Jars of medical marijuana at Sunset Junction medical marijuana dispensary in Los Angeles. Photo by Kevork Djansezian/Getty Images.

Though zoning varies from state to state and region to region, cannabis businesses and dispensaries are located in every corner of Portland, with 100 licensed medical dispensaries in the county alone. No one is immune to the potential criminality.

"It feels like it creates a real risk to us and our business and our assets but also to the neighborhoods our businesses are operating in," Alworth says. "Once you have thieves in the neighborhood, you just don’t know what else they’re gonna do."

Traditional banking is happening in the industry, if you know where to look.

Walstatter says it’s happening very quietly.

Two years ago, the Financial Crimes Enforcement Network (FinCEN) part of the Department of the Treasury, gave banks permission to work with cannabis businesses and professionals as long as certain guidelines and provisions were met. Most national banks (think Chase or Wells Fargo) are chartered, regulated, and insured at the federal level. But smaller, local banks and credit unions are chartered at the state level and answer to state and federal regulators.

Different strains of marijuana for sale on a digital board at a dispensary in Eugene, Oregon. Photo by Andrew Caballero-Reynolds/AFP/Getty Images.

Since the legality of cannabis is still a state-to-state issue, some community banks are willing to take the risk, follow FinCEN guidance, and offer accounts to marijuana-related businesses or, as they're called in the financial industry, MRBs.

Walstatter works with a community bank to manage his funds but declined to share which one. "They actually make most clients sign an NDA for some reason," he says, likely out of fear of drawing unwanted attention from regulators.

But not every financial institution is so secretive about its forays into the industry.

"We saw it as a really good opportunity and the way to advance the medical research behind cannabis. We do think it has some medicinal benefits, but unfortunately the testing has been limited due to its federal illegalities," says Carmella Murphy Houston, vice president of business services for Washington-based Salal Credit Union.

Salal works with more than 300 MRBs in Washington and Oregon, most of them larger producers, processors, and retail businesses.

Per FinCEN guidelines, financial institutions that elect to work with MRBs have to vet and monitor the businesses closely to ensure none of the money is going toward criminal enterprises.

"We have monthly, quarterly, and annual ongoing monitoring that we do on the businesses as well," Houston says. The hefty monthly fees for the MRB accounts help offset the cost of this additional due diligence.

While some banks are willing to take the chance, it's simply not enough to manage the needs of a nearly $7 billion industry.

Less than 3% of the country's 11,954 federally regulated banks and credit unions service the cannabis industry, a total of 301 in 2016.

Photo by Frederic J. Brown/AFP/Getty Images.

Seven additional states legalized medical or recreational marijuana during the last election, bringing the total up to 28. This is quickly becoming an issue of national concern, and it's finally getting some attention in Washington, D.C.

The first week of January, Sen. Elizabeth Warren of Massachusetts led a cadre of senators to push FinCEN to issue additional guidance to banks wishing to work with MRBs.

"You make sure that people are really paying their taxes. You know that the money is not being diverted to some kind of criminal enterprise," Warren said recently, The Associated Press reported. "And it’s just a plain old safety issue. You don’t want people walking in with guns and masks and saying, 'Give me all your cash.'"

Sen. Elizabeth Warren (D-Massachusetts) speaks in Las Vegas. Photo by Ethan Miller/Getty Images.

Those in the cannabis business say these changes can't come soon enough.

For retailers and producers like Walstatter and Alworth, the uncertainty and challenges of the business are worth it to provide a product they believe in. A fix would mean big changes for their businesses and might allow them to focus on other challenging regulations like the tax code, which doesn't allow cannabis businesses to deduct typical business expenses like marketing or administrative costs.

"We’re transitioning from the black and grey markets, so there’s just obstacles and bumps that most businesses don’t encounter," Walstatter says. "Sure, you have to pay taxes like everybody else, but you don’t get to deduct anything. You wanna pay bills, you probably don’t have a bank account. We’re in the hyper-regulated environment, and about two or three times a year, the rules just change in a way that often turns our business model upside down."

Rules may change. Policies may shift. And with the new administration, the way legal marijuana (medical or otherwise) exists in this country may change dramatically. But Walstatter's been through worse. And he's not giving up now.

"We’ve made it this far," he says. "And we’re not turning back."

A man shops at Farma, a marijuana dispensary, in Portland, Oregon. Photo by Josh Edelson/AFP/Getty Images.

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Many thanks to Sally Alworth, Matt Walstatter, and Carmella Murphy Houston for the interviews.

[cannabisbusinessexecutive]

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[cannabisbusinessexecutive]

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