Legal Considerations for Cannabis-Related Businesses
In recent years, societal perceptions and laws regulating the use of cannabis have shifted. While strict laws still regulate the use of cannabis, particularly in relation to its possession and driving under its influence, what was once simply a controlled substance under the Controlled Substances Act (CSA) is now seeing varying degrees of legalization. You can visit this site to learn more about Florida's marijuana driving laws. This shift can be noticed most prominently within the pharmaceutical, food and beverages, wellness, and cosmetics industries.
The global cannabis market is set to generate a revenue of US$60.79bn in 2024, reaching a projected US$102.90bn by 2028. This is an annual growth rate of 14.95%. The rapid growth of this industry makes it necessary for new and existing entrants to the market to be aware of the legal landscape surrounding cannabis.
In this article, we will explore some of the laws that businesses in the cannabis industry as well as those that deal with them ought to be aware of to ensure their legal compliance and long-term success.
Marijuana-Related BusinessesDespite being illegal under federal law, several banking institutions have continued to serve Marijuana-related businesses or MRBs. According to the 2023 Marijuana Banking Update released by the U.S. Financial Crimes Enforcement Network (FinCEN), approximately 675 depository institutions provided banking services to MRBs and it received almost 350,000 marijuana-related suspicious activity reports (SARs).
These financial institutions risk breaching the CSA and are also at risk of money laundering under the 1970 Bank Secrecy Act (BSA). As a result, many financial institutions such as banks, brokers and credit card companies are reluctant or refuse to serve cannabis-related businesses.
To minimize their risk of money laundering and CSA violations, FinCEN has issued guidance known as the ‘BSA Expectations Regarding Marijuana-Related Businesses’. The guidance instructs financial institutions to conduct due diligence, file special-purpose SARs and encourages the ongoing monitoring of MRBs. This guidance assists financial institutions in their dealings with MRBs, ensuring they mitigate their legal risks and remain compliant with the law.
The SAFE Banking ActThe Secure and Fair Enforcement Banking Act (SAFE Banking Act) aims to ease the relationship between financial institutions and MRBs by making their dealings less risky. If enacted, it aims to:
- Shield financial institutions serving the cannabis industry from banking regulators and federal penalties.
- No longer categorize the funds generated by lawful cannabis-related businesses as being the proceeds of unlawful activity.
- Protect employees of financial institutions from federal liability.
- Modify the requirements for providing SARs.
- Safeguard ancillary businesses that support legal cannabis enterprises.
Cannabis LicensingBusinesses that intend to operate within the cannabis industry must also have the appropriate licenses in place. These requirements will differ according to the state and business categorization. The licenses a business will need depend on the areas of business it intends to operate in. The main categories in this area are the following:
- Process and manufacturing
By being aware of the laws and regulations, both at the state and federal level, cannabis-related businesses and those that associate with them can ensure they remain on the right side of the law when venturing into this burgeoning market.
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