CHARLESTON, W.Va. — Questions related to the future of West Virginia’s medical marijuana law passed last year are still centered around the uncertainty for financial institutions potentially involved.
Those questions were the subject of a hearing Monday for the Legislature’s Joint Committee on Health.
Diana Stout, general counsel for the WV State Treasurer’s office, said much of the uncertainty among financial institutions begins with the rescinding of what is colloquially known as “The Cole Memo.” That memo, authored and released in 2013 during the Obama Administration, eased up on certain facets of federal enforcement of marijuana laws, essentially permitting greater state autonomy for those who had enacted legislation legalizing medical or recreational use of cannabis.
“The United States Attorney General Jeff Sessions rescinded the Cole Memo,” Stout said. “The Cole Memo was the basis for why banks were in this industry at all, why banks were accepting these monies.”
Earlier this year, the state’s chief health officer, Dr. Rahul Gupta, was among several to voice the opinion that West Virginia needed to solve its “financial issues” as it pertains to medical marijuana.
In March, Assistant Treasurer Josh Stowers told MetroNews that banks informed the office they are “uncomfortable” and “unwilling” to process funds relating to medical cannabis because the drug is still illegal on the federal level.
Two potential options have included creating a state-run bank or paying a vendor to create a “closed-loop” system for purchases of medical cannabis.
“We looked at this and really tried hard to find a way to do it without legislation, but we truly believe that legislation will be required for us to move forward even if we would bid this out,” Stout said. “Hopefully we would find somebody that would actually bid, but we have no guarantee of that.”
Discussion also focused on the potential use of a ‘cash-only economy’ for medical marijuana, but Stout said banking and credit union interest was limited.
BB&T Bank and U.S. Bank were both among those unwilling to participate in financing of this industry.
“They’re not going to be willing to accept, because of the recision (sic) of the Cole Memo, they aren’t willing to accept any marijuana funds — medical or otherwise,” Stout said.
“We can’t really find a bank in West Virginia — or a credit union — that really wants to walk in and say, ‘Sure, we’ll take all these dollars at this point.'”
A cash economy, Stout said, would have created additional logistical problems — like the need for armed protection around the clock.
Charles M. Johnson of Frost Brown Todd LLC also provided additional testimony Monday.
“Around the country, there’s a lot of alternatives to the cash economy,” he said. “I agree with Diana Stout that the cash economy is not good. People walking around with duffel bags full of cash can create a lot of problems, and you can understand that pretty easy.”
He continued: “The big issue is the risk profile for West Virginia. Digital currency, bitcoin — I could get into any of that, how it might help. But that’s the big issue — the elephant in the room so to speak.”
Around the U.S., legal marijuana is a $7 billion industry — expected to grow into a $75 billion industry by the year 2030.
West Virginia’s medical cannabis legislation is supposed to take effect July 1, 2019.