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Established 1872 Reprinted from July 23, 2018 www.BankerandTradesman.




Deciphering the
Marijuana Industry BY BRAM BERKOWITZ

s a partner and chairman 2010 and 2012, assisting former
of the cannabis practice at Attorney General Martha Coak-
the Boston-based law firm ley in the overall management
Foley Hoag, Kevin Conroy rep- of the Attorney General’s Office
resents cannabis-related opera- and supervising civil matters in
tors and investors in all aspects of the office. Prior to that role, he
their business including corpo- completed stints as the chief of
rate formation and transactions, the Attorney General’s Business
not-for-profit regulation, employ- and Labor Bureau and as gen-
ment matters, trademark matters, eral counsel at the New England
banking and finance issues, coor- Council, a business trade group
dination with federal regulations, focused on economic develop-
legislative issues, business and ment issues in New England.
regulatory disputes and real estate Banker & Tradesman caught up
transactions. with Conroy to discuss the rela-
Conroy was the Massachusetts tionship between financial institu-
deputy attorney general between tions and the marijuana industry.

Q: How did you get into the cannabis business? What do
you like about it?

A: Because much of the cannabis business is interacting with
local, state and federal regulators, representing cannabis business-

KEVIN CONROY es was a natural fit for me and Foley Hoag. We started representing
cannabis companies looking for medical licenses in 2014 and then
Title: Partner and Chairman, Cannabis Practice, Foley Hoag our practice increased significantly after the adult-use referendum
Age: 46 passed in Massachusetts in 2017.
Industry experience: 19 Continued on Page 2

Reprinted with permission of Banker & Tradesman.
This document may constitute advertising under the rules of the Supreme Judicial Court of Massachusetts.

I love that the law and the regulations in this industry are so new and are compliance and will continue to pay the fees as long as Century Bank
constantly evolving. Nearly everything we do has not been done before, accepts their business. The hope for the industry is that other banks
which requires significant creativity on a daily basis. I also love the clients are willing to take the intelligent risk that Century Bank did.
in the industry who recognize that because of the federal uncertainty,

Q: If more financial institutions are to accept marijuana
compliance with state laws and regulations is paramount. Because of
this, clients are eager to make us part of their daily operations.
deposits, do you think it’s necessary for the federal
Q: What is the most important thing financial institutions government to delist cannabis as a schedule 1 drug?
need to consider before deciding to bank marijuana
A: The industry was pleased that Sen. [Elizabeth] Warren filed
legislation to make cannabis legal on the federal level in those states

A: Financial institutions that choose to bank cannabis businesses
need to understand and implement procedures in order to be
that have cannabis programs. Short of an act of Congress, the industry
needs federal banking regulators to change their policies so that banks
are no longer required to report the transactions of state licensed
compliant with federal law and regulations. This is an initial heavy cannabis companies. This reporting requirement makes no sense
resource burden for financial institutions, but it is doable as many because federal prosecutors are not targeting state-licensed cannabis
institutions across the country have shown. Financial institutions companies. Removing this requirement will likely encourage more
should also ensure their marijuana customers have state licenses financial institutions to bank the industry.
and are in compliance with those state licenses.

Q: It has been reported that Century Bank is charging its
marijuana clients $5,000 per month. How lucrative might this
industry be? Is it worth the regulatory headaches?

A: You will need to ask Century Bank, but from my perspective,
Century Bank has taken an intelligent risk to bank the medical
cannabis industry in Massachusetts and I expect they have profited
because of that. Right now, Century Bank is the only option for an
industry that has revenues in the hundreds of millions of dollars in the
commonwealth and will grow to a multibillion-dollar industry with the
introduction of adult use.

Although Massachusetts cannabis businesses do pay significant fees
to Century Bank, these businesses are pleased to have a banking
option, understand that cannabis banking requires significant


1 Will the cannabis
industry be able to
2 Will banks serve the
3 After seeing the
revenues that pour into
4 Will the regulators
allow adult use
5 How long will it be
before our neighboring
produce and will industry? municipalities that delivery? states recognize that
the regulators issue embrace cannabis they are losing
enough licenses businesses, which significant revenue to
to meet the initial Massachusetts Massachusetts by not
demand? municipality will be the legalizing adult-use
first to undo its cannabis?
cannabis ban?

Reprinted with permission of Banker & Tradesman.
This document may constitute advertising under the rules of the Supreme Judicial Court of Massachusetts.