Executive News: Well – now what?

On June 26, I was closely following the results of the primary election in a hotel room where I was attending the annual meeting of bankers associations located in the Heartland. The governor’s primary was of keen interest, of course, as were the races for attorney general and the First Congressional District, among others.

And there was this other thing on the ballot that was of interest to a large number of people: It was one on which the Association had joined with the business community in general to oppose.

SQ 788 was purportedly intended to legalize medical marijuana in Oklahoma. The way it was worded, however, authorized Oklahomans to do a lot more than that. It would also have made it virtually impossible for any business to terminate an employee who showed up for work on a marijuana high.
It was late in the East, where the conference was being held, and as the results began to come in, there were several surprises. And the margin of victory for SQ 788 was certainly one of them.

So – Oklahoma joins 29 other states and the District of Columbia to legalize marijuana in some form, either for medicinal use or for recreational purposes. I’ve lived in Oklahoma for more than 30 years. I love this state, especially it’s people who are generally so kind, generous and fairly conservative. I just didn’t believe this measure was going to pass, worded the way it was.

But it did. Now it’s legal under state law for doctors to prescribe and for citizens to purchase marijuana for medicinal purposes. Except it’s not. And that creates a lot of questions among bankers about what the bank can and can’t do in connection with its customers and their use or production of the weed. Stated another way, how do you as a banker respond to customer inquiries about the customer’s involvement about what they can or can’t do.

I’ve been fielding a lot of phone calls and conversations with bankers since the primary was held, and that’s generally the first question they ask. Those calls began well before SQ 788 passed, as several of my friends and I played “what if” as we laid out various scenarios that might take place if the state question was approved by the voters.

My legal opinion about your involvement with marijuana in any form, as a banker first but also as an individual, is pretty simple: DON’T!

And I don’t say that because I oppose the use of marijuana generally. I don’t. If you want to use it, then knock yourself out, and that’s OK with me personally.

But it’s not OK with the government of the United States of America.

Under the Controlled Substance Act, marijuana is listed on Schedule I. As such, it is in the same prohibited class as:
Heroin.
LSD.
Mescaline (Peyote).
Ecstasy.

Under federal law it’s a crime for any person to knowingly and intentionally rent, lease, profit from or make available for use and place for the purpose of unlawfully manufacturing, storing, distributing or using any of those drugs listed, including marijuana.

It’s also a crime under federal law for any person or entity to knowingly or intentionally manufacture, distribute or dispense marijuana which, as noted earlier, is still a “controlled substance,” in spite of the passage of SQ 788. Given this specific language, I can’t come up with a scenario that will legally authorize a bank to do business with any person or entity involved in any of these highlighted activities, directly or indirectly.

So – what am I really saying? It’s pretty simple, as I said earlier: don’t “bank” the marijuana business in any way! It is a crime under federal law if you do so. If bank regulators find it (refer to the information from the Oklahoma State Banking Department), it’s likely your bank will be referred to the Justice Department for prosecution. When you get a call from Justice, that will be a very bad day.

I know, I know. That’s not helpful, nor is it really an answer to the question of “how” or provide a solution for your bank’s customers that will help address what just happened in Oklahoma. I also understand some of your competitors may be thinking about expanding into this area of “new business” opportunities.

BUT: before YOU do anything like that, check with your bank’s lawyer. You can also call our office and ask for Mary Beth or Pauli, who are both available to your bank at no charge to answer your questions.
As an aside, you may also want to take a closer look at any of your bank’s customers who deal in real property ownership, agricultural production or anything else (landlords, real property owners) that might be involved in the marijuana business in some direct or indirect way. Do not “guess.” Make the effort to investigate and find out. Make sure you are filing your SARs correctly.

There’s a more detailed article on Page 1 of this edition of the Oklahoma Banker. Check it out and call me with your questions.