Event Description

One of the often overlooked aspects of banking cannabis is tailoring your financial institution’s deposit and loan agreements.  Please join Chris Van Dyck, attorney at Cogent Law Group, and expert on cannabis banking, as he discusses some of the critical clauses that need to be included in your financial institution’s agreements. 

A financial institution’s deposit agreements should have specific clauses governing how and where deposits are to be made, who can make the deposits, restrictions on which types of accounts deposits are to be made,  and what types of accounts cannabis businesses may not be eligible for.  It is also prudent to include a condition that your cannabis customer use your financial institution as your primary depository institution.  Furthermore, it is critical that your deposit agreement include a “bad boy” clause permitting your financial institution to terminate the relationship in the event the cannabis customer falls so significantly out of compliance that termination is the only option if your financial institution is going to fulfill its BSA obligations.  Finally, ensure your jurisdiction and venue clauses are cannabis-friendly

Likewise, if your financial institution is considering lending to cannabis businesses, it is critical to include specific clauses to mitigate the risks, including the obligation on the part of the cannabis customer to remain in compliance with its state regulatory requirements, the right to call the loan in the event that the cannabis customer falls out of compliance, as well as restrictions on the types of collateral and how the collateral is to be used.  Like your deposit agreements, it is important to ensure your jurisdiction and venue clause are cannabis-friendly.