AG: Permanent fix to state's medical marijuana funding issue must come from feds

By Chris Dickerson | Jan 11, 2019

CHARLESTON – A permanent fix to questions about West Virginia handling money form medical marijuana must come from the federal government, according to state Attorney General Patrick Morrisey.

Morrisey’s office released an advisory opinion Jan. 11. The opinion was requested by new House Speaker Roger Hanshaw and state Treasurer John Perdue.

During his Jan. 9 State of the State speech, Gov. Jim Justice mentioned wanting to shore up current laws regarding medical marijuana. In 2017, lawmakers passed the measure. But questions linger regarding how the state can comply with federal law regarding taxes and fees. A bill to fix those issues was introduced last year and passed the state Senate, but it didn’t make it through the House before the session ended.

Two possible solutions floated by Perdue’s office are to either create a state bank or to handle transactions through a third-party vendor. A cash-only option also might work.


The AG’s opinion said the office understands the hesitancy some banks have shown to enter the new market, since the fact remains that marijuana remains illegal under federal law. That means any entity that provides banking services to a cannabis business carries an inherent risk of federal civil or criminal action, even in states where medical marijuana is legal, such as soon will be the case in West Virginia.

Also, Congress has blocked the U.S. Department of Justice from using its funds to interfere with a state’s authorized marijuana-related activities, however the AG’s opinion says there is no guarantee Congress will maintain the restriction. It further concludes an end to the funding restriction could expose entities to retroactive prosecution within the statute of limitations.

Similarly, the opinion recognizes reporting guidance issued by the U.S. Department of Treasury to effectively provide a “safe harbor” for banks serving marijuana-related businesses, but, like the Congressional funding restriction, that guidance could be rescinded at any time.

“We conclude that notwithstanding West Virginia’s law, marijuana’s federal status as a controlled substance makes it very difficult for medical marijuana businesses to operate in a way consistent with current federal law and that by extension, financial institutions providing services to these entities may be at risk of federal civil or criminal liability,” the opinion states. “Nevertheless, we are aware of no federal enforcement actions for services related to the marijuana industry in states where medical marijuana is legal, and ‘safe harbors’ against federal enforcement have existed for the past several years. …

“Ultimately, however, this issue implicates federal law and criminal statutes, and any permanent fix must come from the federal government.”

The AG’s opinion says there is no guarantee either a state bank or a third-party vendor would escape scrutiny for handling medical marijuana funds.

“Although states have frequently proposed broader solutions to the issues of stable banking services for marijuana-related businesses, it does not appear that any state has found a complete solution,” the opinion states. “The most effective option for states seeking to facilitate access to banking services for cannabis-related entities may be to design implementing regulations in a way that makes it easier for banks to comply with current federal reporting obligations – as a majority of states to legalize medical marijuana have done.”

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