Questions Raised After Bank Terminates Cannabis-Industry Lawyer's Account
Despite projections of a $7 billion state marijuana industry, major banks and credit unions are still wary of attracting the scrutiny of federal regulators if they accept deposits tied to cannabis-related businesses—even those that never touch a plant.
That puts lawyers in a quandary. Abide by professional requirements with escrow accounts and banks may start asking questions about clients and their money. Maintain ethical duties to protect client information and banks may dump their accounts.
Large firms that have big-dollar, long-term relationships with banks may not have a problem if their “regulated industries” practices constitute a tiny fraction of their work. Smaller shops that openly cater to marijuana clients are taking a much bigger risk, according to lawyers who have clients in the cannabis industry.
“Marijuana attorneys finding themselves excommunicated from their banks are incapable of paying staff, taxes and utilities,” said Steven Schain, the Pennsylvania-based chair of Hoban Law Group’s financial service and banking practice. And if their banks drop them, they could be stuck with only a cashier’s check representing their clients’ escrow account deposits—with no other bank willing to accept them—in violation of their fiduciary duty, he said.