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114 Mich. L. Rev. 803 (2015-2016)
Underbanked: Cooperative Banking as a Potential Solution to the Marijuana-Banking Problem

handle is hein.journals/mlr114 and id is 849 raw text is: NOTE UNDERBANKED: COOPERATIVE BANKING AS A POTENTIAL SOLUTION TO THE MARIJUANA-BANKING PROBLEM Patrick A. Tighe* Numerous states have recently legalized recreational marijuana, which has created a burgeoning marijuana industry needing and demanding access to a variety of banking and financial services. Due, however, to the interplay between the federal criminalization of marijuana and federal anti-money laundering laws, U.S. financial institutions cannot handle legally the proceeds from marijuana activity. As a result, most financial institutions are unwilling to flout federal anti-money laundering laws, and so too few marijuana-related businesses can access banking services. This Note argues that the most viable policy option for resolving this underbanking problem is a financial cooper- ative approach such as a cannabis-only financial cooperative. Even in light of federal anti-money laundering laws, this Note contends that the Federal Re- serve is legally authorized to grant some cannabis-only financial cooperatives access to its payment system services under the Monetary Control Act of 1980. TABLE OF CONTENTS INTRODUCTION..................................................... 804 I. THE FAILURE OF FEDERAL EFFORTS TO REMEDY THE UNDERBANKING PROBLEM ................................... 806 A. A Robust and Growing Marijuana Industry ............... 806 B. Federal Law Has Created the Underbanking Problem ....... 807 C. Federal Regulators Have Not Resolved the Problem ......... 812 II. CURRENT POLICY PROPOSALS MISS THE MARK ................ 816 A. Instituting a Cooperative Federalism Approach ............ 816 B. Amending the CSA ......................................819 C. Using Decentralized Virtual Currency ..................... 822 III. FINANCIAL COOPERATIVES PROVIDE A VIABLE PATH FORWARD ...................................................825 A. The Financial Cooperative Approach ...................... 826 B. The Federal Reserve's Legal Authorization ................. 828 1. Interpretation of the Monetary Control Act of 1980 .. 829 2. Money Laundering Complicity ...................... 830 CONCLUSION ....................................................... 832 * J.D., May 2015, University of Michigan Law School. I would like to thank Professor Michael Barr for his invaluable insight and direction on this Note. I dedicate this Note in honor of my mother, Billie Ruth Tighe, and my uncle, Mike Faubion. 803

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