The New Administration

2016 was the year of marijuana. After the November election's sweeping victory, 28 states, along with Washington D.C., now allow medical or adult recreational marijuana use. The November 2016 election also established a conservative administration that some fear could reverse marijuana's momentum. However, the Trump administration's statements on marijuana, marijuana's profitability and the ramifications of eliminating state legal marijuana industries all indicate that compliant marijuana businesses and the financial institutions that service them are safe.

Jeff Sessions

Though Jeff Sessions has long been a marijuana opponent, his responses to marijuana inquiries at his confirmation hearing reveal he will take a reasonable stance on marijuana. When asked about marijuana, Mr. Sessions stated that while the guidelines in Deputy Attorney General James M. Cole's 2014 memorandum titled Guidance Regarding Marijuana Enforcement (the "Cole Memo") are "truly valuable," he "won't commit to never enforcing federal law." The Cole Memo seeks to preserve federal resources by protecting state licensed marijuana businesses that follow its eight enforcement priorities. Mr. Sessions reiterated this objective, stating enforcement is "a problem of resources for the federal government."

Mr. Sessions' reference to resources is especially significant, because marijuana's current federal safeguards, such as the Rohrabacher-Farr Amendment, prohibit the Department of Justice ("DOJ") from using its resources to "prevent any [state] from implementing [its] own laws that authorize the use, distribution, possession, or cultivation of medical marijuana." Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, § 542. In August 2016, the United States Court of Appeals for the Ninth Circuit further bolstered the Amendment, citing "at a minimum… [the Amendment] prohibits DOJ from spending funds…for the prosecution of individuals who engaged in conduct permitted by the State Medical Marijuana Laws and who fully complied with such laws." United States v. McIntosh et al., Case No. 15-10117, --F.3d --, 2016 WL 4363168 (9th Cir. Aug. 16, 2016).

Mr. Sessions also indicated he will defer to the president on marijuana, stating "it is not the Attorney General's job to decide what laws to enforce." Such deference is encouraging, since President Trump believes marijuana is a states' rights issue.


Marijuana's profitability is no secret. In 2016, the U.S. legal marijuana market was worth roughly $6.7 billion. That number is expected to rise to $21.8 billion by 2020, generating immense tax revenue.

Washington State, which legalized recreational marijuana in 2014, collected approximately $265 million in marijuana taxes in 2016. Colorado's 2016 marijuana tax revenue totaled over $150 million from $1.1 Billion in sales. Oregon's first year of legal recreational sales in 2016 generated over $60 million in taxes. By 2020, California is expected to collect $1.1 billion in marijuana taxes annually.

State regulators use marijuana taxes to fund education, law enforcement, drugged driving prevention programs and health and social services like mental health and drug counseling. Consequently, Mr. Sessions will be hard-pressed to eliminate an industry that generates such substantial tax revenue since this will severely harm state economies and impair social welfare.


Medical and adult recreational marijuana legalization has created strictly regulated industries dedicated to eviscerating the marijuana black market, keeping marijuana away from minors and deterring drugged driving and illegal transactions. Successful legal marijuana industries, like Washington's, require all marijuana sales be tracked from seed to sale, making it nearly impossible for licensees to perform illicit transactions like money laundering and tax evasion. State regulations also mandate that retailers and dispensaries prominently label all marijuana products with warnings like "for use only by adults twenty-one and older. Keep out of reach of children" and "marijuana can impair concentration, coordination, and judgment. Do not operate a vehicle or machinery under the influence of this drug." WAC 314-55-105 (11)(d)-(e). In turn, marijuana-related arrests "have plummeted…saving [states] millions of dollars." Drug Policy Alliance, (2015) So Far, So Good, 4.

Financial institutions servicing these highly regulated businesses play a significant role in industry compliance and the public safety. To abide by FinCEN's marijuana banking guidelines, financial institutions perform extensive "Know Your Customer" due diligence, ensuring their marijuana clients comply with state law and do not implicate any of the 8 enforcement priorities listed in the Cole Memo. Additionally, financial institutions promote public safety by reducing marijuana cash and its accompanying dangers.

If Mr. Session eliminates state regulated marijuana industries and seeks to prosecute legally operating marijuana businesses and the financial institutions that service them, it will detract from the federal government's objective of destroying the marijuana black market, putting drug cartels out of business and promoting public safety.


The Trump administration's statements on the marijuana industry indicate meticulously compliant marijuana licensees will be safe and remain lucrative clients for the banks serving them. While it is unclear how, if at all, state legal marijuana industries will change, it is now more important than ever for marijuana businesses to strictly comply with all federal and state laws and regulations and for financial institutions to perform thorough and continuous due diligence. This includes ensuring marijuana business pre-package all marijuana before sale to consumers, track all marijuana sales using the state-mandated software system and do not use virtual currency, like Bitcoin. To make compliance easier marijuana businesses and the financial institutions that serve them can work with compliance platforms like PayQwick, which ensures licensed marijuana businesses follow all applicable federal and state laws and regulations.

Published in March | 2017

By Kenneth J. Berke, PayQwick, Inc.'s Co-Founder and CEO, and Sahar Ayinehsazian, PayQwick, Inc.'s Director of Regulatory and Governmental Affairs