The Medicinal Cannabis (R)evolution

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Banking the proceeds from the sale of medicinal cannabis, in the context of the ECCU member countries where medicinal cannabis has been legalised, should not present a challenge. Once within the risk appetite of the commercial bank, acceptance of proceeds from licensed medicinal cannabis dealers should be guided by established policies and procedures of the institution and in keeping with legislative requirements regarding customer due diligence, source of funds and wealth. This heightened risk, whether real or perceived, may increase the risk profile of commercial banks and may have implications for correspondent banking relationships. An effective risk management framework would be critical in managing the risk associated with medicinal cannabis customer accounts. Such a framework should include the ring-fencing of funds obtained from medicinal cannabis customers to ensure that funds are not transferred through correspondent accounts in jurisdictions where activities associated with medicinal cannabis is illegal. Important to this process is the understanding that these transactions cannot be denominated in US currency as funds derived from cannabis remain illegal at the federal level in the USA. The Constitution of the United States of America sets out the boundaries of federal law however, the governing body in each State has sovereignty. Nevertheless, state law should not infringe on any federal constitutional rights. Where state law is in conflict with federal law, then federal law prevails and federal prosecutors can prosecute a person for violating federal law. Although cannabis is legal under state law, federal law enforcement could arrest and prosecute persons under federal law. One can understand why commercial banks may be cautious in accepting funds from cannabis businesses, as they can be prosecuted under federal law.