With momentum growing for legal adult-use cannabis in Illinois following the election of J.B. Pritzker to the governorship, the Illinois General Assembly is already proposing legislation that would loosen regulations governing the cannabis industry.
On February 15, 2019, Sen. Heather A. Steans introduced SB 2023, which would amend the Illinois Banking Act and the Illinois Credit Union Act to prevent the Secretary of Financial and Professional Regulation from taking various punitive actions against banks for providing financial services to legitimate cannabis-related businesses. The proposed bill would also prevent the Secretary from recommending or incentivizing a bank to decline, downgrade or cancel financial services for an individual or entity solely because such individual or entity is engaged in a legitimate cannabis-related business, or becomes engaged in such a business, or the financial institution discovers that such individual or entity is engaged in such a business. Senator Steans, together with Representative Kelly Cassidy, is also leading the charge on the legislation to legalize cannabis for recreational adult use in Illinois.
Proponents in the Illinois cannabis industry hope that the proposed bill will provide greater comfort for banks to provide financial services to cannabis-related businesses, since most banks in Illinois and other states have been hesitant to do so in the face of the federal prohibition on cannabis and certain actions taken by the current leadership at the Department of Justice that indicated greater hostility towards the cannabis industry.
On January 4, 2018, the Department of Justice withdrew the August 2013 Cole Memorandum, which had discouraged the federal prosecution of individuals and entities operating cannabis-related businesses in accordance with state laws, and the February 2014 Cole Memorandum, which applied the principals of the initial Cole Memorandum to financial institutions providing services to entities operating cannabis-related businesses in accordance with state law. As a result of these actions by the Department of Justice, Springfield Bank, a downstate bank which had been operating as the main source of financial services for the Illinois medical cannabis industry, stopped providing services to the industry in the spring of 2018. Although some smaller financial institutions continue to work with cannabis-related businesses, the industry is still severely underserved. Since the federal issues that chilled banking activity have not yet been resolved conclusively, the proposed Illinois bill is unlikely to solve the issue on its own, but it would be a good first step in giving greater comfort to banks that wish to get involved in the industry.
Fox Rothschild will continue to track the status of SB 2023, as well as the expected recreational adult-use bill once it is introduced in the General Assembly. For the full text of SB 2023, please see the website of the Illinois General Assembly.
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