Legal Seminar, Denver, CO

071018 Discussion Draft

o Anecdotal evidence indicates that some banks are indeed providing services in Colorado, despite the risks. See, e.g., Jacob Sullum, Marijuana Money is Still A Pot of Trouble for Banks, http://www.forbes.com/sites/jacobsullum/2014/09/18/local-banks- terrified-by-friendly-neighborhood-marijuana-merchants/ (September 18, 2014) (noting some banks quietly providing services); o FinCEN, Marijuana Banking Update, indicates that over 400 banks and credit unions were providing services as of 2017 based on SAR filings. https://www.fincen.gov/sites/default/files/shared/Marijuna_Banking_Upda te_Through_Q1_2017.pdf a. Legislative efforts so far have failed to provide a clear basis for doing business. b. As noted above, the so-called “Cole Memorandum” has been revoked, and in its place, the following guidance was offered to US attorneys: In deciding which marijuana activities to prosecute under these laws with the Department's finite resources, prosecutors should fo llow the well- established principles that govern all federal prosecutions. Attorney General Benjamin Civiletti originally set forth these principles in 1980, and they have been refined over time, as reflected in chapter 9-27 .000 of the U.S. Attorneys' Manual. These principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community. c. FinCEN has indicated that it will continue the prior regime. See letter from Drew Mahoney, Ass’t Sec’y for Legis. Affairs, Treasury Department, to Hon. Denny Heck, January 31, 2018, available at https://dennyheck.house.gov/sites/dennyheck.house.gov/files/documents/Trea sury%20Response%201.31.18_Heck.pdf B. Gambling & Fantasy Sports. With the recent Supreme Court decision in Murphy v. NCAA , 584 U.S. __ (2018), which invalidated the Professional and Amateur Sports Protection Act, sports betting is likely to expand in scope. But like other forms of gambling (or arguably similar activities, including the recently popular phenomenon of fantasy sports leagues), some states choose to restrict this activity. Compliance with UIGEA may have been difficult before, but the legal framework is shifting. This will put additional pressure on payment providers to get it right. Technologies including geolocation, as well as coding and other KYC techniques, will remain important parts of the regulatory and compliance toolkit. For what is quickly becoming a history of this subject, see my chapter, Regulation of Online Gambling (November 1, 2015), in John A. Rothchild (ed.), RESEARCH HANDBOOK ON ELECTRONIC COMMERCE LAW (Edward Elgar 2016). Available at SSRN: https://ssrn.com/abstract=2693208 2. Current guidance.

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