101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB3953

 

Introduced 11/12/2019, by Rep. Kambium Buckner

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Cannabis Banking and Credit Union Act. Establishes a procedure to license financial institutions to provide banking services to cannabis businesses. Sets forth provisions concerning an advisory board, application and licensure, authorizations, deposit insurance, banking services, prohibited practices, and operative conditions. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Cannabis Banking and Credit Union Act.
 
6    Section 5. Definitions. In this Act:
7    "Applicant" means a person or entity that submits an
8application to be licensed by the State to provide banking
9services to a cannabis business.
10    "Banking services" means the provision of depository
11services with respect to cash or other funds and the issuance
12and acceptance of special purpose checks, including the
13acceptance and maintenance of deposit proceeds, consistent
14with the requirements and limitations provided by this Act.
15    "Board" means the Cannabis Banking and Credit Union
16Advisory Board.
17    "Cannabis business" means a person or entity registered or
18licensed to engage in commercial cannabis activity under the
19Compassionate Use of Medical Cannabis Program Act or the
20Cannabis Regulation and Tax Act. The term "cannabis business"
21also includes an ancillary business or profession that serves a
22person or entity registered or licensed to engage in commercial
23cannabis activity.

 

 

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1    "Cannabis limited charter bank or credit union" means a
2person or entity that receives a license following the approval
3of an application pursuant to this Act.
4    "Department" means the Department of Financial and
5Professional Regulation.
6    "Licensee" means a cannabis limited charter bank or credit
7union.
8    "Secretary" means the Secretary of Financial and
9Professional Regulation.
 
10    Section 10. Cannabis Banking and Credit Union Advisory
11Board.
12    (a) The Cannabis Banking and Credit Union Advisory Board is
13created. The Board shall be comprised of the State Treasurer,
14the State Comptroller, and the Secretary of Financial and
15Professional Regulation. The Director of the Governor's Office
16of Management and Budget shall serve as an ex officio,
17nonvoting member. Board members may not be compensated for
18their services.
19    (b) The Board shall be generally responsible for ensuring
20that this Act provides a safe and efficient way to pay State
21and local taxes and fees, to pay rent associated with the
22account holder's cannabis business, to issue special purpose
23checks, and to legally invest in this State's economy, while
24reducing the burdens placed on local government that result
25from collecting and managing large sums of cash.

 

 

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1    (c) The Department shall submit reports of enforcement
2activities to the Board for review annually or as the Board may
3require. The Board shall meet once a year or more often as
4needed at the Board's discretion to review enforcement activity
5reports from the Department. These meetings shall be noticed
6and open to public comment. The Board shall evaluate the
7reports and the comments of the public and draft recommended
8actions to be taken legislatively or administratively, which
9shall be submitted to the General Assembly, as provided in
10Section 3.1 of the General Assembly Organization Act, and the
11Governor.
12    (d) The Board shall provide guidance and education to
13registered broker-dealers and licensed investment advisors on
14how to accommodate account holders of a cannabis limited
15charter bank or credit union in purchasing, holding, and
16selling any of the investments described in Section 25.
 
17    Section 15. Licensing.
18    (a) A person or entity may act as a cannabis limited
19charter bank or credit union after obtaining a license pursuant
20to this Act.
21    (b) A cannabis limited charter bank or credit union license
22is not transferable or assignable.
23    (c) A licensee shall comply with all requirements of the
24Illinois Banking Act or the Illinois Credit Union Act, as
25applicable, except to the extent that any requirement of those

 

 

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1laws are inconsistent with a provision of this Act, in which
2case the provisions of this Act shall prevail.
3    (d) A cannabis limited charter bank or credit union shall
4adopt policies and practices that allow it to comply with the
5principles and policies found in the federal Bank Secrecy Act
6(31 U.S.C. 5311) and to cooperate with the federal Financial
7Crimes Enforcement Network.
8    (e) The Department shall adopt rules to implement this Act.
 
9    Section 20. Application.
10    (a) An applicant to be licensed as a cannabis limited
11charter bank or credit union shall submit a completed
12application to the Department in a form prescribed by the
13Secretary that satisfies the requirements of this Section.
14    (b) An applicant shall elect to form under either the
15Illinois Banking Act or the Illinois Credit Union Act and shall
16comply with all requirements imposed by those laws, as
17applicable, except to the extent that any requirement of those
18laws is inconsistent with the provisions of this Act.
19    (c) The name of a cannabis limited charter bank shall
20include "cannabis limited charter bank" or the abbreviation
21"C.L.C.B." or "CLCB". The name of a cannabis limited credit
22union shall include "cannabis credit union" or the abbreviation
23"C.C.U." or "CCU".
24    (d) The Department may charge the applicant a reasonable
25fee for a cannabis limited charter bank or credit union

 

 

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1license, not to exceed the costs of regulation.
 
2    Section 25. Authorizations.
3    (a) A cannabis limited charter bank or credit union may
4issue to an account holder special purpose checks that are
5valid only for the purposes specified in subsection (b). The
6following text shall be printed on each check in at least
712-point type, with the name of the issuing financial
8institution included: "This check is issued by [insert name of
9financial institution] and may only be deposited or cashed at
10this cannabis limited charter bank or credit union or another
11cannabis limited charter bank or credit union that agrees to
12accept this check.".
13    (b) Subject to the limitations of subsection (d), a special
14purpose check issued by a cannabis limited charter bank or
15credit union may be used only for the following purposes:
16        (1) To pay fees or taxes to the State or a local
17    jurisdiction.
18        (2) To pay rent on property that is leased by, or on
19    behalf of, the account holder's cannabis business.
20        (3) To pay a vendor that is physically located in this
21    State for expenses related to goods or services associated
22    with the account holder's cannabis business.
23        (4) To purchase the following:
24            (A) Bonds, interest-bearing notes, or
25        interest-bearing warrants of this State for which the

 

 

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1        faith and credit of this State are pledged for the
2        payment of principal and interest.
3            (B) Bonds or warrants, including, but not limited
4        to, revenue warrants, of any unit of local government
5        or school district of this State.
6    (c) Subject to the limitations of subsection (d), State and
7local government offices are authorized to accept a special
8purpose check issued by a cannabis limited charter bank or
9credit union.
10    (d) An individual or entity, private or public, is not
11required to accept a special purpose check issued by a cannabis
12limited charter bank or credit union pursuant to this Section.
13    (e) A cannabis limited charter bank or credit union is
14authorized to cash a special purpose check presented to it by a
15person or entity that is not an account holder if that cannabis
16limited charter bank or credit union previously issued that
17special purpose check to an account holder and the check was
18used for one of the authorized purposes specified in subsection
19(b).
 
20    Section 30. Deposit insurance. A cannabis limited charter
21bank or credit union shall obtain and maintain deposit
22insurance, in an amount acceptable to the Secretary, for the
23cannabis depository institution and its assets at all times
24while it is engaged in banking services. Private insurance
25shall be satisfactory to the Secretary. In seeking and

 

 

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1retaining deposit insurance, a cannabis limited charter bank or
2credit union may do all things and assume and discharge all
3obligations required of it that are not in conflict with State
4law.
 
5    Section 35. Banking services.
6    (a) A cannabis limited charter bank or credit union may
7enter into an agreement with one or more other licensees in
8order to form a banking network. That agreement shall be
9subject to the approval of the Secretary. The network shall be
10for the purpose of assisting each other in providing services
11to cannabis businesses and each other. A network of this type
12shall not include any financial institution that is not a
13licensee under this Act.
14    (b) A cannabis limited charter bank or credit union may
15provide accounts to people and entities other than cannabis
16businesses pursuant to rules adopted by the Secretary.
17    (c) A cannabis limited charter bank or credit union may
18charge fees for the banking services that it provides. Each
19cannabis limited charter bank and credit union that charges
20fees shall conspicuously post on its Internet website the types
21of fees and the amount of fees it charges for its services, in
22a format intended to provide transparency.
 
23    Section 40. Prohibited practices.
24    (a) A cannabis limited charter bank or credit union may not

 

 

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1engage in banking activity with any other financial institution
2that lacks a license issued under this Act.
3    (b) Except as otherwise provided in Section 45, only a
4cannabis limited charter bank may merge with one or more
5cannabis limited charter banks. The provisions of the Illinois
6Banking Act applicable to mergers between banks shall apply,
7subject to the limitations in this Section.
8    (c) Except as otherwise provided in Section 45, only a
9cannabis limited credit union may merge with one or more
10cannabis limited credit unions. Section 63 of the Illinois
11Credit Union Act shall apply, subject to the limitations in
12this Section.
13    (d) Except as otherwise provided in Section 45, a cannabis
14limited charter bank or credit union shall not be eligible to
15convert to a federal bank or federal credit union or to another
16type of business entity.
 
17    Section 45. Operative conditions.
18    (a) This Act shall become inoperative if either of the
19following occurs, whichever occurs first:
20        (1) The federal government, by legislative or
21    executive action, removes cannabis and cannabis-related
22    substances from the schedule of controlled substances, as
23    defined in the federal Controlled Substances Act (21 U.S.C.
24    812, 21 CFR 1308).
25        (2) The federal government enacts legislation that

 

 

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1    established protections for depository institutions that
2    provide financial services to cannabis-related legitimate
3    businesses.
4    (b) Within 30 days after the occurrence of either event set
5forth in subsection (a), the Department shall do both of the
6following:
7        (1) Post notice of that occurrence on the homepage of
8    its Internet website and send notice to both the Secretary
9    of State and the Legislative Reference Bureau. The notice
10    shall specify the date that this Act shall become
11    inoperative, which shall be one calendar year following the
12    effective date of the events specified in subsection (a).
13        (2) Provide guidance for the orderly resolution of all
14    cannabis limited charter banks or credit unions licensed
15    pursuant to this Act. The resolution may involve, but is
16    not limited to:
17            (A) the voluntary liquidation of a cannabis
18        limited charter bank pursuant to the Illinois Banking
19        Act;
20            (B) the sale, merger, or conversion of a cannabis
21        limited charter bank pursuant to the Illinois Banking
22        Act; or
23            (C) the merger, dissolution, or conversion of a
24        cannabis limited credit union pursuant to the Illinois
25        Credit Union Act.
26    (c) A cannabis limited charter bank or credit union shall

 

 

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1have one calendar year to orderly resolve in a manner
2acceptable to applicable State and federal regulators.
3    (d) Notwithstanding subsection (c), a cannabis limited
4charter bank or credit union shall comply with all applicable
5State laws regarding filings with the Secretary of State.
6    (e) If a cannabis limited charter bank or credit union
7fails in good faith to comply with subsection (c), the
8Department may take any action under this Act it deems
9necessary, including signing documents on behalf of the
10cannabis limited charter bank or credit union, to carry out the
11purposes of this Section.
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.