The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has released updated quarterly statistics showing a continuing increase in the number of depository institutions that actively bank U.S. marijuana businesses. As of March 31, 2018, a total of 411 banks and credit unions provided services to marijuana-related businesses, up from 365 one year ago. FinCEN’s data reflects a slight decrease following the Attorney General’s announcement in January 2018 that he was rescinding the Cole Memorandum, but the numbers quickly went back up, ending the quarter at their second-highest level since December 31, 2017. FinCEN’s data is based upon Suspicious Activity Reports (SARs) required to be filed by financial institutions on activity involving a marijuana-related business.

In guidance issued in February 2014, FinCEN required financial institutions providing services to marijuana businesses to file the following types of SARs depending upon the type of services being provided:

  • A “Marijuana Limited” filing, which means that the financial institution’s due diligence indicates that the marijuana-related business does not raise any of the red flags as defined in the Cole Memo and is compliant with the appropriate state’s regulations regarding marijuana businesses. In this category, the financial institution is providing banking services to the marijuana-related business.
  • A “Marijuana Priority” filing, which means the financial institution’s due diligence indicates that the marijuana-related business may raise one or more of the red flags as defined in the Cole Memo or may not be fully compliant with the appropriate state’s regulations regarding marijuana-related businesses. In this category, the financial institution is providing banking services to the marijuana-related business while further investigation is being conducted.
  • A “Marijuana Termination” filing, which means the financial institution decided to terminate its relationship with the marijuana related business for one or more of the following reasons:

– The financial institution’s due diligence indicates that the marijuana-related business raises one or more of the red flags as defined in the Cole Memo.

– The marijuana-related business is not fully compliant with the appropriate state’s regulations.

– The financial institution has decided not to have marijuana-related customers for business reasons.

Following the Attorney General’s announcement in January 2018, FinCEN announced that its 2014 guidance would remain in place. And FinCEN’s latest publication of marijuana-banking statistics contains this important note:

Note: The SAR reporting structure laid out in the 2014 guidance remains in place. FinCEN will continue to work closely with law enforcement and the financial sector to combat illicit finance, and we will notify the financial sector of any changes to FinCEN’s SAR reporting expectations.

As of April 12, 2018, FinCEN has received 51,391 SARs involving marijuana-related businesses since issuance of FinCEN’s February 2014 guidance. The vast majority of those SARs – nearly 38,000 – were “Marijuana Limited” filings, indicating that the financial institution was providing ongoing banking services to the marijuana business in question. FinCEN has received approximately 3,800 “Marijuana Priority” SARs, and over 12,000 “Marijuana Termination” SARs, during the same time period.

An analysis of FinCEN’s SAR filing data continues to show a generally positive and encouraging trend for marijuana businesses, notwithstanding the Justice Department’s policy reversal on marijuana enforcement. For the first three quarters of 2018, the number of “Marijuana Limited” SAR filings increased every month by an average of 1,401 filings. In comparison, the number of “Marijuana Priority” and “Marijuana Termination” SAR filings increased by an average of only 480 and 173, respectively.

Few things are as bi-partisan as constructing a snazzy acronym for federal legislation, and Senators Elizabeth Warren (D-MA) and Cory Gardner (R-CO) did not disappoint with the “Strengthening the Tenth Amendment Through Entrusting States Act”  (“STATES Act”). As its name suggest, the goal of the STATES Act is to protect regulated cannabis businesses and users in states where cannabis has been legalized by amending the Controlled Substances Act.

U.S. Capitol Building
Copyright: mesutdogan / 123RF

The Controlled Substances Act, 21 U.S.C. §§ 801, et seq. (“CSA”) is the federal law that makes the manufacture, distribution, and use of marijuana illegal, and is the main source for the dichotomy between state and federal law concerning cannabis. The proposed legislation seeks to amend the CSA by adding several sections which would essentially exempt state-sanctioned marijuana from the CSA. While the STATES Act would not legalize cannabis on a nationwide level, it would and give states the freedom to legalize cannabis or keep it illegal.

The STATES Act has received so much attention not only because of the sweeping changes it proposes, but also because it has received tacit approval from President Trump, who was previously seen as a roadblock to cannabis legislation. That is due in part to a deal struck between Senator Gardner and the President, which ended with the following pronouncement from Gardner: “President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.”

The folks at Leafly have a great breakdown and explanation of the STATES Act, including the following bullet points on what the legislation proposes:

  • The act amends the Controlled Substances Act (CSA) so that as long as states and tribes comply with a few basic protections, its provisions no longer apply to any person acting in compliance with state or tribal laws relating to marijuana activities.
  • The act states that compliant transactions are not trafficking and do not result in proceeds of an unlawful transaction. This would go a long way towards ending the difficulties cannabis companies have in obtaining banking services.
  • The measure removes industrial hemp from the list of controlled substances under the CSA.
  • The following federal criminal provisions under the CSA continue to apply:
    • Prohibits endangering human life while manufacturing marijuana
    • Prohibits employment of persons under age 18 in drug operations
  • The act prohibits the distribution of marijuana at transportation safety facilities such as rest areas and truck stops.
  • The measure prohibits the distribution or sale of marijuana to persons under the age of 21 other than for medical purposes.

We will continue to monitor and provide updates on this important legislation, which has great implications for cannabis businesses throughout the country.


Joseph McNelis works in Fox Rothschild’s Blue Bell, PA office and focuses his practice on labor and employment matters. Joe also tracks legal developments in the cannabis industry in Pennsylvania and nationwide. Joe can be contacted at 610-397-2332 or jmcnelis@foxrothschild.com.

After a closely watched one day trial last week, Judge Karen Gievers issued a 22 page Order and Final Judgment.  Judge Gievers found that the legislation which implemented Amendment 2 (medical marijuana) is unconstitutional because it conflicts with the language of the constitutional amendment itself.

Section 381.986, Florida Statutes (2017) unconstitutionally restricts rights that are protected in the [Florida] Constitution, and so the statutory prohibition against the use of smokeable marijuana permitted by [a] qualifying patient is declared invalid and unenforceable.

Qualifying patients have the right to use the form of medical marijuana for [the] treatment of their debilitating medical condition as recommended by their certified physicians, including the use of smokable marijuana in private places.

The Judge largely adopted the arguments put forth by Plaintiffs’ counsel who had argued that the the medical marijuana definition approved by Florida voters in November 2016 included “all types of medical marijuana,” including smokeable forms.  Plaintiffs’ counsel also argued that Amendment 2 implicitly recognized the right to smoke medical marijuana in private since the Amendment indicated there was no right to smoke it in public places.

The State of Florida quickly appealed the Order which will delay, at least temporarily, any right to legally smoke cannabis in Florida.


Dori K. Stibolt is a West Palm Beach, Florida based partner with Fox Rothschild LLP.  She focuses her practice on litigation and labor and employment issues and has taken a special interest in the cannabis business.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

Grow Your Own Case

Recently, I posted about a Leon County, Florida Court case in which the Judge found in favor of a medical marijuana patient who sought permission to grow his own medical marijuana because he needed the raw plant for the treatment his state-certified doctor had prescribed to him for his stage 4 lung cancer.  Medical cannabis dispensaries in Florida do not provide raw plant product.  Following that Court Order, Florida’s Department of Health filed an appeal.

The First District Court of Appeal in Florida has temporarily blocked that ruling and reinstated the stay that prevented Joe Redner, the medical marijuana patient, from growing his own medical marijuana.  We will continue to monitor this matter.  Mr. Redner has indicated that he will pursue his case to the Florida Supreme Court.

Smoking Case

As I’ve posted before here and here, the regulations implementing Florida’s Amendment Two (medical marijuana) banned the smoking of medical marijuana.  And, not surprisingly, litigation was immediately filed challenging the smoking ban.

The trial in the case challenging the smoking ban is scheduled to start tomorrow and we will be monitoring it as it progresses.  The trial judge in the smoking case is Leon County Circuit Judge Karen Gievers.  Judge Gievers is the same Judge who ruled in favor of Joe Redner in the grow case noted above.

In Other Florida News

Despite a slow start in implementing medical marijuana and getting licenses issued and regulations written, Florida now has more than 100,000 registered medical marijuana patients.


Dori K. Stibolt is a West Palm Beach, Florida based partner with Fox Rothschild LLP.  She focuses her practice on litigation and labor and employment issues and has taken a special interest in the cannabis business.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

Green California Vector IllustrationIn an Alert published Thursday, Fox partner Tracy Gallegos and associate Lynnel Reyes examined new emergency regulations recently proposed by the California Department of Public Health to allow Type 6, 7, or N cannabis licensed manufacturers to register their facility as a “shared-use” facility. The regulations also provide for a new license, the Type S license, which would allow licensees to create infusions, package and label cannabis products and conduct extractions with butter or food grade oils (provided that the extract or concentrate produced may only be used in infused products manufactured by that licensee.) The regulations are expected to be approved by tomorrow, April 13, 2018.

Tracy and Lynnel outline the details of the proposed regulations and the new Type S license, including its benefits, associated concerns and the application process.

To read their full discussion, please visit the Fox Rothschild website.

Florida’s medical marijuana regulations do not presently permit medical marijuana patients to grow their own medical marijuana.  Florida’s Department of Health’s website states the following:

Florida law only allows the licensed dispensing organizations to grow, process and dispense marijuana. The department will refer any business or individual suspected of violating state law to local law enforcement for investigation. It is important to remember marijuana is illegal under federal law.

Joe Redner, of Tampa Florida, challenged this Florida regulation and argued in his lawsuit that he was entitled to grow his own medical marijuana because he needs the raw plant for the treatment his state-certified doctor has prescribed to him for his stage 4 lung cancer.  Medical cannabis dispensaries across the state do not provide raw plant product.

Leon County Circuit Judge Karen Givers recently ruled in Mr. Redner’s favor and found that the

Florida’s Constitution provides Mr. Redner’s right to grow his own medical marijuana so he can follow his physician’s recommendation.  Until and unless the [Florida Department of Health] stops violating its Constitutional duty and adopts the mandated presumptive regulation, the evidence clearly demonstrates that Mr. Redner is entitled to follow the recommendations of his certified physician.

However, this ruling is limited solely to Mr. Redner and no other Florida medical marijuana patients can grow their own medical marijuana pursuant to this ruling.  The Florida Department of Health is likely to appeal the Court’s Order.


Dori K. Stibolt is a West Palm Beach, Florida based partner with Fox Rothschild LLP.  She focuses her practice on litigation and labor and employment issues and has taken a special interest in the cannabis business.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.