The laws impacting cannabis and marijuana-related businesses have been an evolving landscape in both the U.S. and Canada. There are also a number of inconsistencies between U.S. Federal and State laws that make it increasingly difficult for stakeholders in the cannabis business to determine what is legal. 29 states plus the District of Columbia have legalized marijuana for medical purposes, six states have legalized marijuana for recreational use and Maine and Massachusetts have approved legalization measures that have not yet taken effect.
Under the Controlled Substances Act (the “CSA”), federal Law prohibits the manufacture, possession, or use of marijuana for any purpose, including medical purposes. The Money Laundering Control Act also prohibits knowingly conducting a financial transaction that involves the proceeds of unlawful activity, which includes violations of narcotics laws. However, there is an exclusion from violation of the CSA where the underlying activity is not an offense in the foreign country.
The landscape in the U.S. has changed very recently with the passage of the Agriculture Improvement Act of 2018 (also called the Farm Bill). The Farm Bill makes “industrial hemp” exempt from the Controlled Substances Action, which is the law prohibiting the manufacture, distribution and dispensing of marijuana for any purpose even in states where recreational or medical marijuana sales are legal. The Farm Bill also allows for interstate sales of hemp products. There are also efforts in certain states, namely Oregon, to allow Oregon-grown cannabis to be sold across state lines. Because of this confusing and contradictory environment in the U.S., there are genuine issues around whether marijuana-related businesses can access services of financial institutions such as obtaining loans, opening bank accounts, accepting credit and debit cards and using electronic payroll services.