Oregon Marijuana: The Banking Bill

Oregon is blazing new trails with its cannabis laws.
Oregon is blazing new trails with its cannabis laws.

This is the final installment in a four-part series on the new Oregon marijuana bills, all of which arrived in the recently concluded short session. If you wish to catch up, our summary of HB 4014 (abolishing residency requirements) is here, our summary of SB 1511 (medical and recreational co-location) is here, and our summary of SB 1598 (pretty much everything else) is here. This post covers HB 4094, a brisk four-pager related to financial institutions doing business in Oregon.

Depending on whom you ask, there may be nothing more problematic for cannabis companies than the lack of banking options. Entrepreneurs are forced to conduct transactions in cash, including big-ticket items like payroll and tax payments. Commercial loans are non-existent, and mortgages, trust deeds and other instruments held by lenders tend to prohibit landlords from renting to cannabis businesses. Here at Canna Law Blog, we have written extensively on the dismal banking topic, including here, here, here, here, and here. Lack of banking access has caused safety issues alongside significant operational constraints on pot businesses.

HB 4094 may not expand access to banking services, at least with the larger institutions. However, the bill exempts all financial institutions serving licensed pot businesses from Oregon criminal laws. Until now, those laws had treated banks and credit unions servicing cannabis accounts as conspirators. The hope going forward is that smaller Oregon banks and credit unions will now step up to offer accounts, as our client Salal Credit Union has done in Washington State.

It is worth noting that banks, at least in theory, have had the ability to service pot accounts under federal Financial Crimes Enforcement Network (FinCEN) regulations for a couple of years. The FinCEN regulations require due diligence and monitoring requirements for financial institutions servicing businesses in the marijuana industry, but provide no protection from criminal prosecution. When you consider also that banks cannot get federal deposit insurance or a Federal Reserve master account, the lack of banking services feels vaguely intractable.

If HB 4094 does succeed in getting a few Oregon banks to test the waters, the Oregon Liquor Control Commission (OLCC), Oregon Health Authority (OHA), and Department of Revenue are required to provide information on marijuana licensees or permit holders to those banks, presumably for FinCEN compliance. Local businesses need not worry: the financial institution is prohibited from sharing this information except as required. Finally, the new law directs the Oregon Department of Consumer and Business Services to put on its Canna Law Blog hat and study federal laws related to financial services in the marijuana industry, and report back.

In all, Oregon’s new banking law is not going to change the game fundamentally; that will not happen until marijuana laws change at the federal level. However, Oregon once again appears to be doing everything it can to help its cannabis industry and we have every reason to think Governor Brown will sign this new law. When she does (or simply doesn’t veto within 30 days), HB 4094 will take immediate effect.