In a letter sent to legislative leadership and the governor, West Virginia State Treasurer John Perdue is proposing two options for processing medical cannabis funds.
The first recommendation is a closed-loop, open-loop or combination system. A closed-loop system would provide a way for payments to be made only within a network of entities and individuals who have accounts within the system. The system would monitor and facilitate financial transactions between state and authorized entities associated with medical cannabis.
An open-loop system would provide payment services that could also generate payments outside the network. The letter said this would provide a way for establishing accounts by entities associated with medical cannabis, maintain fraud prevention practices, provide reporting including online access and integration with the Bureau for Public Health, and provide other services including armored car/courier services.
The second option is a West Virginia state-owned bank, which would be operated by the treasurer’s office. This would need authorizing legislation.
Perdue’s office sent the letter Thursday to Gov. Jim Justice, Senate President Mitch Carmichael, House Speaker Tim Armstead, Senate Minority Leader Roman Prezioso, House Minority Leader Tim Miley, and Bureau for Public Health Commissioner Dr. Rahul Gupta.
“The processing of medical cannabis funds is a complicated issue,” the letter said. “In an effort to find a lawful banking solution for the West Virginia Medical Cannabis Act, my staff and I have proactively reached out to discuss the situation with many stakeholders on both the state and national levels.”
In March, Perdue asked for guidance from Treasury Secretary Steven Mnuchin. He also joined with about 10 other state treasurers in sending a letter to congressional leadership urging legislative changes to protect medical marijuana patients.
The office also released a request for information in April searching for solutions for sales, fees, licenses, taxes and other transactions related to medical cannabis. The request was distributed to hundreds of potential vendors in the banking industry who operate traditional banking relationships and third-party payment processing systems, the letter said.
However, Perdue’s office said they only received two responses and neither provided “sufficient detailed information or helpful guidance on how West Virginia should proceed to solve the medical cannabis banking issues.”
Back in January, U.S. Attorney General Jeff Sessions rescinded the Cole Memo, which previously provided low-priority guidance on the law enforcement and prosecution of activity related to state-sanctioned marijuana.
Banking vendors on contract with the state notified the treasurer’s office that they would not accept deposits related to marijuana sales, citing federal banking laws.