The Bank Secrecy Act (“BSA”) implementing regulations at 31 CFR Chapter X require covered financial institutions to file reports of suspicious transactions with the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) in circumstances where the bank knows, suspects, or has reason to suspect that the transaction “involves funds from illegal activities.”  The requirement to file such suspicious activity reports or “SARs” arises under federal law.  Marijuana-related business activity that has been legalized under certain state laws—e.g., recreational cannabis dispensaries in Colorado—remains illegal under the federal Controlled Substances Act.  The conflict between state and federal law is, in the…

In August, the FBI announced that it would be focusing on public corruption in state marijuana licensing. In September, the Mayor of Fall River, Massachusetts was indicted for extorting more than $250,000 in bribes from cannabis businesses in return for assistance with licenses.  In October, alleged Rudolph Giuliani associates Lev Parnas and Igor Fruman were indicted for, among other things, a scheme to make illegal campaign finance donations in connection with a planned recreational marijuana business in Nevada.  Last week, the US Department of Justice announced charges against two officials of the city of Calexico, California (a small city about…

How to eliminate the marijuana black market? As the COVID-19 crisis continues to ravish state budgets, this question has become even more important, particularly in states like California, which have legalized marijuana but have not seen the expected tax revenues due to the persistence of the “tax exempt” black market. Increased enforcement would help, of course. But the best way to eliminate the illegal market is to support market entry by legitimate businesses. Several states have declared marijuana businesses “essential” and exempt from COVID lockdown requirements. Congressional appropriations riders prevent DOJ from prosecuting medical marijuana businesses that comply with state…

January 4, 2020 marked the two year anniversary of the “Sessions Memorandum” in which (then) Attorney General Jeff Sessions rescinded the Cole Memorandum and other Obama era DOJ guidance which essentially stated that DOJ would not prosecute state-compliant marijuana-related activity.  Many saw the statement as a declaration of a new “War on Drugs.” However, a review of DOJ cases brought over the last two years reveals that the Trump Justice Department has largely adhered to the Obama Administration’s enforcement priorities. The Cole Memorandum The Cole Memorandum stated that federal cannabis enforcement resources would be concentrated on cases involving: Revenue from…