Medical marijuana and industrial hemp businesses need banking services as much as other businesses do. (Photo: Shutterstock)
On July 3, New York’s Gov. Andrew M. Cuomo directed the state’s Department of Financial Services (DFS) to support the development of medical marijuana and industrial hemp businesses by issuing guidance regarding what his statement announcing the guidance called the “safe and sound provision of banking services for these businesses.”
According to Cuomo’s statement, the DFS guidance is designed to encourage New York state-chartered banks and credit unions to consider establishing banking relationships with medical marijuana-related businesses that are operating in New York in full compliance with all applicable New York State laws and regulations, including the New York Compassionate Care Act, and the applicable regulations and requirements of the state Department of Health. The guidance also encourages state-chartered banks and credit unions to support the development of industrial hemp businesses statewide.
“The ability to establish a banking relationship is a challenge that legal industries face unlike no other,” Cuomo said. “As the federal government continues to sow discord surrounding the medical marijuana and industrial hemp businesses, New York has made significant progress in creating a supportive economic development and regulatory landscape for these companies.”
The guidance notes that “So long as it remains difficult to open and maintain bank accounts, the industry will largely rely on cash to conduct business and operate.” Large amounts of cash distributed outside the regulated banking system is unacceptable and creates risks to the companies, their employees and business partners. In addition, large-scale cash operations make it difficult to track funds for tax and anti-money-laundering purposes.
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Cutting red tape
“While the federal government ignores the reality of the benefits of medical marijuana and industrial hemp, New York has supported the development of the industry and advanced our agricultural economy,” said Lt. Gov. Kathy Hochul in the announcement. “We’re cutting the red tape and removing regulatory barriers to support businesses in the legal cannabis industry. Today’s action to encourage banking relationships will go a long way to assist…