A majority of states in the United States permit the regulated sale of cannabis products. The federal government does not, with the exception of Epidiolex, which the FDA recently approved for the treatment of two rare and severe forms of epilepsy. In fact, at the federal level cannabis is in the same class with drugs like heroin and LSD, as drugs with no currently accepted medical use and a high potential for abuse. The penalties for violations of federal law with respect to cannabis may include lengthy prison sentences, significant fines and property forfeiture. Accordingly, managing the legal challenges presented by the conflict between state and federal law raises a number of issues for those engaging directly or indirectly in the business of manufacturing and selling cannabis products, including leasing, banking, financing, insurance, tax deductions, and restructurings.
Under the Obama administration, Deputy Attorney General James Cole provided guidance to federal prosecutors to prioritize the prosecution of activities that posed a serious threat to public safety (the “Cole Memo”). Subsequently the Financial Crimes Enforcement Network issued a memorandum in February 2014 clarifying what services financial institutions are permitted to provide to cannabis-related businesses while remaining compliant with the Bank Secrecy Act.