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Cannabis Banking Today – Canna Law Blog™



We are helping build out another marijuana banking program here in Oregon. My law firm has done a series of these for credit unions (“CU”s) and other financial institutions (“FIs”) going back to 2014. We have also handled a good bit of hemp banking work– mostly in 2019 and 2020 before that industry cratered. In this post, I’ll sketch out some considerations for FIs looking at banking marijuana-related businesses – or, as they are known in the common parlance, “MRBs”. And I apologize in advance for all the acronyms. That’s banking.

MRB defined

The term “MRB” is used pervasively in cannabis banking, yet this term is not defined in the moldering 2014 Financial Crimes Enforcement Network “FinCEN” Guidance. It’s also not defined in the 2020 National Credit Union Administration Guidance on banking hemp-related business (“HRB”s) (which we helped write) or the 2020 FinCEN Guidance on that related topic.

The lone federal definition we have is from a 2018 Small Business Administration (“SBA”) Policy Notice, as revised, which categorizes MRBs as “direct marijuana businesses”, “indirect marijuana businesses”, and “hemp-related businesses.” Here is my shorthand:

  • Direct Marijuana Business.” A business that grows, produces, processes, distributes or sells marijuana or marijuana products. Applies to personal and medical use activity.
  • Indirect Marijuana Business.” A business that derived any of its gross revenue for the previous year from sales to Direct Marijuana Businesses. Examples include testing labs and sellers of grow lights or smoking devices.
  • “HRB” A business trafficking in hemp which “can demonstrate that its business activities and products are legal under federal and state law.” Examples given are paper, rope and clothing companies.

I have written on this blog that “all businesses are marijuana businesses” in the MRB context. In that piece, I also explained that FIs don’t really use the SBA definitions set forth above. Instead, early, state-chartered CUs began using a three-tiered system to analyze potential MRB clients within the FinCEN framework. That system was first expounded in 2016 by Steve Kemmerling of CRB Monitor, before “hemp” was removed from the definition of “marihuana” under federal law. The CRB Monitor system involved the following categories (which SBA probably referenced):

  • Tier I MRB: “Plant touching” businesses licensed by the state. Cannabis dispensaries, cultivators, processors and testing facilities all fall under this definition. These are the highest risk businesses for banks and constitute the majority of suspicious activity report (“SAR”) filings.
  • Tier II MRB: Businesses that rely on Tier I MRBs for the majority of their revenues and play a large role supporting the industry. See: equipment suppliers, consultants and industry associations. These businesses are lower risk for banks than Tier I. However, banks target them for enhanced KYC (“know your customer”) protocols.
  • Tier III MRB: Businesses that service Tier I businesses, but do not rely on the cannabis industry for their primary source of revenue. Classic examples include lawyers, accountants, property management firms and utility companies.

It’s worth noting that CRB Monitor revised and further parsed its definitions in 2020, but in my experience, most FIs keep it simple with the legacy framework or something similar. It isn’t a legal framework, after all. It’s just an expedient model that has been adopted widely by FIs given the federal leadership vacuum.

The bottom line here is that any FI looking at banking MRBs – or HRBs, for that matter – needs to come up with definitions and criteria for what an MRB or HRB actually is and does. That criteria can be shared with potential clients, or not, during the screening and ongoing KYC processes for industry accounts. In my experience, drawing lines around “indirect marijuana businesses” / “ancillary businesses” / Tier III MRBs is the most challenging area here.

Ownership tracking parameters

Inside and outside the MRB context, FinCEN requires FIs to track and report “beneficial owners” of the businesses they bank. Beneficial ownership reporting is a core industry requirement, with a new rule coming down the pike January 1, 2024, in fact. A “beneficial owner” for FinCEN purposes is anyone who: (a) has significant responsibility to control, manage or direct a legal entity customer; or (b) directly or indirectly owns or controls 25% or more of a company’s equity. (Again, my shorthand.)

In the MRB context, FIs often hold clients to a heightened disclosure standard. This isn’t merely due to the nature of the industry. Most state marijuana programs have ownership disclosure standards which require disclosure of anyone: (a) with control over the cannabis business, or (b) who owns equity in a cannabis business. The thresholds tend to be lower than the “beneficial owner” numbers– sometimes 20%, 10%, or even lower. Disclosure doesn’t always mean vetting, but the names must be surrendered.

An FI should want to know at least as much about the ownership of its member or customer as state cannabis regulators–  especially in the absence of federal industry regulation on that topic. Typically, the FI will shortcut this inquiry by requiring the MRB to produce its application and license records with the state. And the FI will not open an account until the state has actually issued a marijuana regulatory license, in most cases. Which brings me to my next point.

Working with state regulators

FIs that wish to bank MRBs need to request and receive records from state regulators on a regular basis. This ties into KYC considerations, which include not relying on the customer (or member) representations to the FI. In the cannabis context, FIs have an obligation via FinCEN to double-check state regulators’ work, essentially.

State regulators do tend to publish basic information on their licensees: the company name, type of license it holds, license number, and sometimes published decisions or disciplinary proceedings. However, I don’t know of any state that publishes information on the ownership structure of its cannabis licensees. This means that information which isn’t statutorily subject to redaction (e.g. social security numbers, site security plans) will be available only via a public records request.

Public records requests can be time-intensive and expensive. From experience, cannabis regulators may struggle to fulfill them regardless of legal requirements. Thus, FIs that wish to bank MRBs generally enter into information-sharing agreements with the relevant state regulator(s). At this point, many state agencies are accustomed to such arrangements.


FIs will have various intake forms for all potential members and customers. These forms must be tailored for MRB and HRB applicants, and supplemented to boot. Here’s a typical universe of forms an FI will send to any cannabis industry applicant:

  • Enhanced Monitoring Account (EMA) Cannabis Industry Certification
  • EMA Supplemental Agreement
  • CRB or HRB and Ancillary Business (AB) Supplement
  • CRB or HRB or AB Attestation
  • Consent to Release Form (for state regulators, see supra)

The forms, in turn, will require various submissions by the applicant, from regulatory license packets on down. Here at the law firm, I expect we will revisit many of these forms for FI clients in the near future, owing to changes in the hemp space under the 2023 Farm Bill. And perhaps again with respect to marijuana if moved to Schedule III.

Transaction monitoring, detection and reporting

The federal government has put FIs in a truly awkward position on MRBs. Bank Secrecy Act / Anti-Money Laundering (“BSA/AML”) compliance is a significant undertaking for FIs even outside the cannabis space. However, the FinCEN Guidance bumps things up a level by essentially deputizing FIs as federal law enforcement auditors. FinCEN requires FIs to monitor their MRB customers and members perpetually, including what they sell and to whom, and to watch for indicia of adverse information.

These FI obligations commence immediately and ensue perpetually. Specifically, the FI is required to file an initial SAR within 30 days of onboarding. The FI must also file continuing SARs every 90 days after that, in addition to “marijuana limited”, “marijuana priority” and “marijuana termination” SAR filings, as needed, based on any number of events – or suspected events – set forth in the 2014 FinCEN Guidance. To say nothing of all the currency transaction reports (“CTRs”).

These filing obligations, and all of the software and training that goes with them, are frequently cited by FIs as a primary justification for the increased fees paid by MRBs. Law enforcement may hardly be acting on them, but FIs need to comply.

Services to offer

Most FIs that work with MRBs offer limited services, or basic depository accounts. That said, we’ve worked with a couple of CUs that offer a full suite of banking and lending services. There are limits, of course, to what even the most enterprising FIs can do. They cannot offer bank card transaction processing for cannabis purchases (at least, not anymore). If the FI is smaller, like many state-chartered CUs, it will be limited in its deposit carrying capacity; this makes for an awkward constraint in a cash-laden industry.

Many FIs that get into cannabis banking are pulled into the space by one or two high-net-worth customers. Then, they will slowly branch out to a wider client base and often a wider suite of offerings. Others are more intentional, and set out to target the industry.

Regulatory dynamism

I mentioned the Farm Bill is up for renewal this year, directly affecting banking for HRBs, and that “marijuana” may also move to Schedule III sometime in 2024. In addition, the specter of legislative reform is forever hanging about the industry (via the SAFE Banking Act, though I’ve called it oversold). Locally, new state cannabis programs continue to come online. This sometimes results in modest state-level legislation to insulate FIs from local prosecution for banking cannabis, even if such changes do not create a federal safe harbor or touch on BSA/AML strictures.

Overall, any FI that moves into this space should be prepared to roll with some changes over the next couple of years. Those changes are happening, however, because the cannabis industry is growing. It’s not a bad time to get in right now. It’s probably better than ever, in fact.

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Minnesota Social Equity Verification: Key Dates Start June 21




The Minnesota cannabis social equity initiative

As Minnesota continues to develop its legal cannabis industry, the Minnesota Office of Cannabis Management (OCM) has taken significant steps to ensure that the process is inclusive and equitable. One of the most notable advancements in this area is the recent update to the social equity application and verification process for cannabis licenses.

This advancement aims to address the harmful societal impacts of the War on Drugs, historical disparities, and ensure that those most affected by cannabis prohibition have the opportunity to participate in the new market. Historically, communities of color and economically disadvantaged groups have been disproportionately affected by cannabis prohibition. Recognizing this, Minnesota has committed to creating a more inclusive industry by providing these groups with enhanced opportunities to obtain cannabis licenses.

Just recently, Minnesota enacted amendments and modifications to their new cannabis law enacting a licensing preapproval and vetted lottery process for qualified social equity applicants. In addition to streamlining the application process, Minnesota has also introduced support services for social equity applicants. These services include business development training, mentorship programs, and access to financial resources. By providing these tools, the state hopes to empower social equity applicants to succeed in the cannabis industry.

Recognizing the importance of awareness and education, the OCM has established a campaign focused on outreach and education regarding the new and ever-evolving regulations surrounding cannabis licensing. These initiatives aim to inform potential applicants about the benefits of social equity verification and guide them through the process. This includes community workshops, online resources, and partnerships with local organizations.

Minnesota social equity verification requirements

Beginning on Monday, June 24, 2024, the OCM will begin the verification process for qualified individuals who want to be pre-approved for cannabis licenses.

Broadly speaking, to qualify for a social equity cannabis license under Minnesota regulations, an applicant must have been convicted of cannabis possession or sale, be a military veteran, or have worked for a farming operation. These specific requirements are explained in more detail below and can be found on the OCM website here with the required documentation for each category:

  1. The applicant was convicted of an offense involving the possession or sale of cannabis prior to May 1, 2023;
  2. The applicant had a parent, guardian, child, spouse, or dependent convicted of an offense involving the possession or sale of cannabis prior to May 1, 2023;
  3. The applicant was a dependent of someone convicted of an offense involving the possession or sale of cannabis prior to May 1, 2023;
  4. The applicant is a military veteran, including service-disabled veterans, or current/former members of the National Guard;
  5. The applicant is a military veteran or National Guard member who lost honorable status due to an offense involving the possession or sale of cannabis;
  6. The applicant has been a resident for the past five years in an area with:
    1. High cannabis enforcement rates as determined by federal or state studies or data;
    2. A poverty rate of 20% or more;
    3. Median family income not exceeding 80% of the statewide median family income;
    4. At least 20% of households receiving Supplemental Nutrition Assistance Program (SNAP) assistance; or
    5. Populations that experienced a high level of vulnerability, according to the Centers for Disease Control and Prevention’s Social Vulnerability Index; or
  7. The applicant has participated in farm operations for at least three years, providing the majority of day-to-day labor and management on a farm with gross sales between $5,000 and $100,000 in the previous year.

Key upcoming dates for Minnesota social equity applicants

On June 21, 2024, the OCM will host a training workshop from 4-6 pm at Sabathani Community Center Auditorium located at 310 E 38th St. Ste. 200, Minneapolis, Minnesota 55409. Participants for the training can register here. For anyone unable to attend in person, the OCM will publish another recording on its website providing an outline of the verification process.

On June 24, 2024, the OCM will open the social equity verification process allowing participants to ensure they meet the social equity requirements. This process will end on July 10, 2024.

On July 24, 2024, those applicants that were verified as social equity applicants will be able to submit an application for cannabis license preapproval. Those license applications will then go through review and a vetting process and will be entered into a lottery to be held later this fall. This preapproval process window will close on August 12, 2024.


The OCM is moving swiftly in order to bring the Minnesota legal cannabis market online. In doing so, they are prioritizing social equity applicants and providing guidance and a preapproval vetting process for those applicants ready to apply. However, this process will require the submission of specific documents and evidence that the applicant meets the criteria set forth above, so it is best if applicants begin reviewing the documentation requirements now. Applicants should then start compiling those documents and getting their applications ready.

Be sure to review the OCM website for additional requirements and resources. They plan to publish additional materials in the coming weeks to assist social equity applicants through the process of obtaining a cannabis license.

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Celebrating Juneteenth Today – Canna Law Blog™




Our offices are closed today in commemoration of the Juneteenth holiday. In the past, we’ve used this occasion to highlight the need for criminal justice reform, inside and outside of the cannabis industry.

Juneteenth is also a day of celebration, to commemorate the liberation of enslaved people in the United States.

We hope you have the day off today! And that you have the opportunity to celebrate and reflect on the significance of our newest federal holiday.

We’ll be back tomorrow with our regular programming.

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Talking to God and Feeling the Warmth of Your Soul




what is tripping on DMT like

Dimethyltryptamine, or DMT, is a substance with hallucinogenic properties that may be found in a wide range of plants and animals. When taken in large enough quantities, DMT may produce a “high” and cause distortions in one’s senses, making things appear that they aren’t. Other names for it include elven spice, spirit molecule, businessman’s special, and Dimitri.


For ages, people from many cultures have utilized DMT in rituals and religious ceremonies. It is one of the active components in South American psychedelic beverage ayahuasca. Laboratories are also capable of producing synthetic DMT.


Recreational users go for DMT because it produces a strong, brief “trip,” sometimes referred to as a “breakthrough in DMT.” Although some studies point to possible advantages for both physical and mental health, the drug’s adverse effects may offset these advantages.


Some have described tripping on DMT “like dying”, but in a positive way of getting to see the universe and afterlife. Many people feel a deep euphoric feelling that can be humbling, like comparing yourself to a piece of sand in the universe.  In a religious sense, those say you become one with the universe or the “god in you”.




Both DMT and LSD, sometimes known as acid, are potent “psychedelic” substances that can change your perception. Their molecular makeup is identical to that of serotonin, a neurotransmitter found in your brain.


Differences between DMT and acid include:


Source. While LSD is manmade and derived from a material in a fungus that grows on rye grains, DMT is found in both plants and mammals.


Length of time. Whereas an acid trip can last up to 12 hours, DMT is a powerful, short experience lasting 15 to 60 minutes.


How Does DMT Trip Make You Feel?


DMT affects individuals differently, but common effects include:


– Visual or auditory hallucinations

– Out-of-body experiences

– Mood changes

– Heightened sensitivity to physical sensations such as pain, tingling, and warmth

– Feelings of euphoria or intense happiness

– Spiritual and emotional experiences

– Distorted body image

– The ability to unlock hidden memories


The effects of DMT depend on several factors, including:


– Your size, weight, and overall health

– Whether it’s your first time using it or not

– Whether you have taken other substances simultaneously

– The dosage

– The drug’s potency, which can vary between sources

– Your environment

– Your mood at the time of consumption


Set and Setting with DMT


When using DMT, your physical surroundings and mental state are referred to as your “set and setting.” These factors have a big impact on your experience, both good and bad.


The set is the state of mind you are in before using the drug; it includes your feelings, expectations, past psychedelic experiences, and any tension or worries you may be experiencing.


Setting includes the people and things in your immediate surroundings. You may be in a familiar setting with individuals you can trust, or you may be in a foreign area alone. You will be affected differently by a calm, peaceful setting than by a busy, boisterous one.


Can DMT Cause a Bad Trip?


It is possible to have a negative experience, or “bad trip,” when taking DMT. Instead of euphoria, you might feel:


– Intense anxiety

– Frightened by your hallucinations

– Very confused

– Paranoid


Being in a positive set and setting can help reduce the risk of a bad trip.


Due to limited research, the long-term effects of DMT are not well understood. Flashbacks, which can be unpleasant and occur days, weeks, or even months after taking DMT, are a commonly reported side effect.


While there are no reports of toxicity from long-term DMT use, there are concerns about its impact on heart health, as it can raise blood pressure.


Potential Therapeutic Uses of DMT


According to recent studies, DMT may have a variety of medicinal uses. Studies suggest that DMT may be helpful in the treatment of mental health issues, however, they are still in their early phases. Here are a few possible medicinal applications:


1. Treatment for Sadness and Anxiety: According to preliminary studies, DMT can affect mood in a quick and significant way, which may be able to provide treatment for those with sadness and anxiety. Because DMT experiences are strong and brief, they may provide immediate therapeutic effects without requiring lengthy therapy sessions.


2. Support Psychotherapy: People may find it easier to process trauma and unearth suppressed memories if DMT can elicit strong emotional and spiritual experiences. DMT may help make significant progress in psychotherapy under carefully monitored conditions, enabling patients to address and resolve ingrained psychological problems.


3. Potential for Addiction Treatment:

Some studies suggest that DMT and other psychedelics might be useful in treating substance abuse disorders. By providing profound insights and altering perception, DMT could help individuals break free from addictive behaviors and develop healthier coping mechanisms.


4. Neurogenesis and Brain Health: Some research indicates that DMT may encourage neurogenesis, or the development of new neurons, which may have an impact on cognitive performance and overall brain health. Conditions like Alzheimer’s disease and other neurodegenerative illnesses may benefit especially from this feature.


Even while these prospective advantages seem encouraging, it’s crucial to remember that DMT research is still in its early stages. To completely comprehend its therapeutic potential and create safe, efficient treatment procedures, more thorough, controlled research is required. To reduce hazards and optimize benefits, the DMT experience is intense, thus it must be administered in a controlled setting, ideally under the guidance of qualified specialists.


Bottom Line


DMT, or dimethyltryptamine, is a powerful hallucinogenic compound found in various plants and animals and can be synthesized in laboratories. Known by names like elven spice, spirit molecule, businessman’s special, and Dimitri, DMT has been used for centuries in rituals and religious ceremonies, particularly in South American cultures through the ayahuasca brew. Recreational users seek DMT for its intense, short-lived “trip,” which can include profound sensory distortions and out-of-body experiences. The effects of DMT vary greatly depending on factors like dosage, individual health, environment, and mental state. A positive “set and setting” can enhance the experience and reduce the risk of a “bad trip,” characterized by intense anxiety, confusion, and paranoia. Although the long-term effects of DMT are not well understood due to limited research, some studies suggest potential therapeutic benefits, such as treatment for depression, anxiety, and substance abuse disorders. However, these potential benefits come with risks, including the possibility of flashbacks and concerns about heart health due to increased blood pressure. In summary, while DMT offers intriguing possibilities for both recreational and therapeutic use, it should be approached with caution and ideally under professional supervision to mitigate risks and maximize potential benefits.





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