In short, “no,” there have not been any new developments regarding marijuana. However, WBA expects buzz about potential legalization to pick up again soon. As marijuana becomes a hot topic once more, you might wonder what banks should do were it to become legalized. Additionally, as we get closer to the end of the year, when Wisconsin’s Hemp Program will begin its transition to a new program, it’s important to be prepared to adjust banks’ policies and procedures accordingly. This article is designed to present some thoughts that banks should consider and discuss internally over the coming months regarding both marijuana and hemp. 

As of publication of this article, marijuana remains unlawful on both a state and federal level. WBA will continue to monitor proposed legislation and report back to the membership of any new developments, but at this time, Wisconsin has not yet legalized marijuana. However, this doesn’t mean that banks should take a “head-in-the-sand” approach to marijuana-related businesses (MRBs). For example, recreational marijuana is legal in Illinois and Michigan. As such, Wisconsin banks might see MRBs searching for products at their institutions. Even if not, your institution should consider how it would react if marijuana were to be legalized in some capacity in Wisconsin. 

The first step in these considerations should be to determine whether bank will do business with MRBs. It will then want to develop policies and procedures accordingly. Regardless of policy, banks should also be prepared to identify whether a customer is an MRB. Thus, staff will need to be prepared to identify MRBs, to ask questions, and request additional documentation if necessary. That additional documentation will be what provides bank with the necessary information to determine whether its customer is in compliance with state laws, and, ultimately, whether bank is willing to do business with them. 

That documentation will vary depending on the marijuana laws of the state, and a bank will also likely want to prepare its own documentation to be completed by the customer. For example, WBA has created a Questionnaire and Certification to be incorporated into a bank’s account agreement when working with hemp-related businesses. In the event that marijuana were to be legalized in Wisconsin, in addition to providing further guidance on information to collect under any potential Wisconsin licensing and registration programs, WBA would consider creating similar documentation for MRBs. Banks will also want to consider Bank Secrecy Act (BSA) requirements. This means not only proper “know your customer” procedure, tailored to the uniqueness of the marijuana industry, but also appropriate risk-rating, and ongoing monitoring for compliance. 

It's worth mentioning at this point that the above is presented purely in the context of MRBs and marijuana, not hemp. Hemp that is grown and produced in Wisconsin in accordance with Wisconsin’s Hemp Program administered by the Department of Trade, Agriculture, and Consumer Protection (DATCP) is legal. Wisconsin banks should certainly develop policies and procedures with regard to banking hemp-related businesses, but those considerations would be separate, as legal treatment of hemp is distinct from marijuana. 

Regarding the transition of Wisconsin’s Hemp Program, banks should be aware that DATCP is currently in discussions with the U.S. Department of Agriculture (USDA) to consider whether to transition Wisconsin’s hemp program to USDA. This decision will be based on being able to provide hemp growers the greatest opportunity to produce hemp in Wisconsin. 

Nothing is changing for Wisconsin hemp licensees during the 2021 growing season. Growers will continue to work with DATCP on all harvest notifications, sample collection, and testing. 

Some of the benefits to hemp growers should the state shift to a federal-run program include no licensing fees and a three-year license instead of an annual one. 

Currently, three other states (Hawaii, Mississippi, and New Hampshire) and multiple tribal nations have federal-run hemp programs. Since state-run hemp programs must also meet federal requirements, Wisconsin’s hemp program is already in close alignment with USDA so a transition should not result in significant program changes for growers. Additionally, USDA will be able to communicate directly with growers for any federal rule changes. 

WBA will continue to monitor the situation of both hemp and marijuana within the state and update the membership accordingly. If you have any questions on this topic or other matters of compliance, contact WBA’s legal call program at 608-441-1200 or wbalegal@wisbank.com

MacKinnon is WBA vice president – legal.

Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution’s attorney for special legal advice or assistance.