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afforded banks some protections and guidance, but it lists of signs that bank staff may notice as “red flags” of
was rescinded in 2018 due to its inability to effectively MRB activity, discussion of the information needed for
reconcile state and federal law differences. Despite the enhanced customer due diligence on MRB customers,
Memo’s recission, it remains the only guidance that banks and a comprehensive MRB risk assessment. Lastly,
really have to establish guidelines and principles related banks should consult with bank counsel having robust
to banking MRBs. The Financial Crimes Enforcement knowledge of the marijuana-related laws in the state,
Network (“FinCEN”) believes the principles laid out in because knowledge of state law is critical for the bank to
the Memo are valid and still expects banks to follow them determine the level to which it can facilitate MRBs.
as much as possible.
Until there is more clear guidance from the federal
Even in states where banking MRBs is not prohibited government, the internal and external bank debates may
under state law, many banks choose not to bank MRBs continue. For each bank, determining their state’s stance
due to the difficulty and due diligence required to do so. on the legality of marijuana, deciding whether the bank is
Conversely, other banks are willing to take on the risk going to serve MRBs, and defining the bank’s applicable
of banking these customers. Banks willing to undertake policies and practices will tremendously help to organize
these types of customers must consider several issues. the chaotic conversations that surround marijuana and
marijuana banking.
First, banks must identify the risk level of an MRB. Risk
levels defined in guidance range from Tier 1 to Tier 3,
with Tier 1 being the riskiest. Tier 1 MRBs are those Carol Ann Warren, JD, MBA serves as Assistant
that are directly related to manufacturing, growing, Vice President Associate General Counsel for
dispensing, or distributing marijuana-related products. Compliance Alliance. She graduated cum laude
These are typically dispensaries, farms, or producers and from Mississippi College with a Bachelor of
generally require specific state licensures outside of the Finance. She earned a Juris Doctorate and a
Master of Business Administration through a joint
standard state licensure for a business. This is usually degree program at Mississippi College School of
done through the state Department of Agriculture, but Law and Mississippi College. During law school,
licensing requirements can vary from state to state. Tier 2 she received Best Paper Awards for Securities
MRBs have a decreased risk because these are businesses Regulation and Electronically Stored Information.
She is one of our featured authors on the B/A
that do not directly touch marijuana. Examples of Tier 2 ACCESS magazine and for other publications.
businesses are marijuana paraphernalia sellers, industry
associates, and sellers of farm equipment for MRBs. After graduation, Carol Ann worked as an attorney
for the Mississippi Insurance Department, where
Lastly, Tier 3 MRBs are the least risky businesses. They she began her passion for helping others navigate
have loose ties to MRBs. These include consultants, through the regulatory environment. She has a
commercial real estate owners that rent to MRBs, and diverse educational and experiential background in
technology providers. business management, business law, securities, and
insurance.
Next, the bank will need to be aware of its Suspicious
Activity Reporting (“SAR”) obligations. There are three
different SARs that come into play: (1) Marijuana
Priority; (2) Marijuana Limited; and (3) Marijuana
Termination. Each SAR has different requirements based
on the type of activity noted.

Further, the bank will need to develop robust policies
to bank MRBs. The policies should include detailed

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