Marijuana laws fodder for compliance mayhem

Because several states have legalized marijuana for various uses, but the substance has remained federally illegal, compliance issues abound.

The chasm dividing those on opposite sides of the marijuana legalization debate has seemingly grown wider in past years in the U.S. because of various states' rulings legalizing the substance despite its federal prohibition. Naturally, with any state regulation passed against federal, there are bound to be compliance issues, especially regarding a substance that is the center of such hot debate. 

Compliance heavily factors into companies that dispense marijuana -- whether for recreational or medical use. The Wall Street Journal reports that a number of companies are wrestling with various state-based regulations in light of complying with federal ones. While they have seen room to grow in light of the legalization of marijuana in certain states, they also have unique challenges.

Robert Frichtel, a chief executive of Advanced Cannabis Solutions based in Colorado, highlighted the problem for companies dealing with marijuana dispensing: “Any business accepting a payment from a licensed, regulated marijuana business at the state level could in theory get caught up in money laundering. That includes any attorney, insurance providers, even landlords like us who are building owners that lease to the industry,”

Advanced Cannabis Solutions provides financing and consulting services within the marijuana dispensing industry. While it does not grow or directly dispense marijuana itself, the company must be aware of the risks of aiding and financially dealing with companies whose product is technically federally illegal. And much of the risk comes from the inability to access proper banking procedures, as many in the industry find themselves at a disadvantage even for having the term "marijuana" associated with their business. The hope is that the Department of Justice overhauls the process by which companies associated with compliance, financial, or consulting services with marijuana-based companies are prosecuted, and that it eventually restructures the money laundering rules in the U.S. to make it easier for those in the industry to do business. 

 

Further reading: 

AG Eric Holder says legal marijuana businesses should have bank access

Marijuana an increasingly attractive investment opportunity despite unclear financial regulations

Marijuana prices skyrocket in Colorado with recreational purchase legalization

Contributing Author

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Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

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