Regular Session 2021-2022 Senate Bill 1167 P.N. 1525

PRIOR PRINTER'S NO. 1515

PRINTER'S NO. 1525

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

1167

Session of

2022

INTRODUCED BY DiSANTO, STREET, LAUGHLIN, BREWSTER, GORDNER,

CAPPELLETTI, REGAN, BOSCOLA, MENSCH, KEARNEY, ROBINSON, MUTH,

KANE AND HAYWOOD, MARCH 25, 2022

SENATOR DiSANTO, BANKING AND INSURANCE, AS AMENDED,

MARCH 30, 2022

AN ACT

Amending Title 12 (Commerce and Trade) of the Pennsylvania

Consolidated Statutes, providing for legitimate cannabis-

related business.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Title 12 of the Pennsylvania Consolidated

Statutes is amended by adding a chapter to read:

CHAPTER 55

LEGITIMATE CANNABIS-RELATED BUSINESS

Sec.

5501. Scope of chapter.

5502. Definitions.

5503. Services to legitimate cannabis-related businesses.

5504. Protections for financial institutions, insurers,

legitimate cannabis-related businesses and business

associates.

5505. Access to information.

5506. Required disclosures.

5507. Ordinary business deductions.

5508. Regulations and statements of policy.

§ 5501. Scope of chapter.

This chapter relates to legitimate cannabis-related

businesses.

§ 5502. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Business associate." A person that is a customer or

supplier of goods or services to or for the benefit of a

legitimate cannabis-related business or an officer or director,

owner, operator, shareholder, member, employee, agent or

financial backer of a legitimate cannabis-related business.

"Cannabis." Any substance defined as "marihuana" by section

102 of the Controlled Substances Act (Public Law 91-513, 84

Stat. 1236) or section 2 of the act of April 14, 1972 (P.L.233,

No.64), known as The Controlled Substance, Drug, Device and

Cosmetic Act. The term shall include hemp.

"Cannabis product." A product that contains cannabis, a

cannabis extract or a cannabis concentrate, including, but not

limited to, edible products, beverages, topicals, ointments,

oils, tinctures, capsules, pills, suppositories, inhaled

products, a hemp-derived cannabinoid product or a medical

marijuana product as defined in section 103 of the act of April

17, 2016 (P.L.84, No.16), known as the Medical Marijuana Act.

"Depository institution." As follows:

(1) a depository institution as defined in section 3(c)

of the Federal Deposit Insurance Act (64 Stat. 873, 12 U.S.C.

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§ 1811 et seq.);

(2) a Federal credit union as defined in section 101 of

the Federal Credit Union Act (48 Stat. 1216, 12 U.S.C. § 1751

et seq.); or

(3) a State credit union as defined in section 101 of

the Federal Credit Union Act.

"Federal financial regulatory agency." The term includes the

Federal Reserve System, the United States Treasury, the

Comptroller of the Currency, the National Credit Union

Administration, the Federal Deposit Insurance Corporation, the

Securities and Exchange Commission and the Consumer Financial

Protection Bureau.

"Financial institution." A depository institution, trust

company, licensee, a person subject to the jurisdiction of the

Securities Exchange Commission or a person subject to the

jurisdiction of the Department of Banking and Securities under

the act of December 5, 1972 (P.L.1280, No.284), known as the

Pennsylvania Securities Act of 1972.

"Financial service."

(1) The term includes a financial product or service:

(i) as defined by section 1002 of the Dodd-Frank

Wall Street Reform and Consumer Protection Act (Public

Law 111-203, 12 U.S.C. § 5301 et seq.), regardless of

whether the customer receiving the product or service is

a consumer or a commercial entity; or

(ii) permitted to be provided under the authority

of:

(A) a national bank or a financial subsidiary

under 12 U.S.C. §§ 24 (42 Stat. 767), 24a (113 Stat.

1373) and 92a (76 Stat. 668);

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(B) a Federal credit union under the Federal

Credit Union Act;

November 30, 1965 (P.L.847, No.356), known as the

Banking Code of 1965;

(D) a credit union under 17 Pa.C.S. (relating to

credit unions) ;

(E) a person registered, or exempt from

registration, to offer or sell any security, or to

act as a broker, dealer, transfer agency, clearing

agency or investment company under the Investment

Company Act of 1940 (54 Stat. 789, 15 U.S.C. § 80a-1

et seq.);

(F) a person registered, or exempt from

registration, to:

(I) offer or sell any security, under the

Securities Act of 1933 (48 Stat. 74, 15 U.S.C. §

77a et seq.);

(II) act as an exchange, a broker, dealer,

transfer agent or clearing agent under the

Securities Exchange Act of 1934 (48 Stat. 881, 15

U.S.C. § 78a et seq.);

(III) act as an investment adviser under the

Investment Advisers Act of 1940 (54 Stat. 847, 15

U.S.C. § 80b-1 et seq.); or

(IV) act as an investment company under the

Investment Company Act of 1940; or

(G) a person acting as a broker-dealer, agent,

investment adviser or investment adviser

representative in this Commonwealth under the

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Pennsylvania Securities Act of 1972.

(2) The term includes a service, whether performed

directly or indirectly, authorizing, processing, clearing,

settling, billing, transferring for deposit, transmitting,

delivering, instructing to be delivered, reconciling,

collecting or otherwise effectuating or facilitating the

payments of funds, where funds payments or funds are made or

transferred by any means, including by the use of credit

cards, debit cards or other access devices, accounts,

original or substitute checks or electronic funds transfers.

"Hemp." As defined under section 297A of the Agricultural

Marketing Act of 1946 (132 Stat. 4908, 7 U.S.C. § 1639o).

"Insurance service." A service authorized to be provided by

an insurer in this Commonwealth.

"Insurer." An entity or person authorized by the Insurance

Department to transact the business of insurance in this

Commonwealth or designated as an eligible surplus lines insurer

as defined in section 1602 of the act of May 17, 1921 (P.L.682,

No.284), known as The Insurance Company Law of 1921. The term

includes a person licensed by the Insurance Department to sell,

solicit or negotiate insurance, and that person's officers,

directors, agents and employees.

"Legitimate cannabis-related business." A person that

participates in any business or organized activity that involves

handling cannabis or a cannabis product, including cultivating,

producing, manufacturing, selling, transporting, displaying,

dispensing, distributing or purchasing cannabis or a cannabis

product in compliance with FEDERAL LAW, the laws of this

Commonwealth or a law established by another state.

"Licensee." A person defined as a licensee by section 2 of

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the act of May 15, 1933 (P.L.565, No.111), known as the

Department of Banking and Securities Code.

"State." Any state, territory or possession of the United

States, the District of Columbia, the Commonwealth of Puerto

Rico, the Commonwealth of the Northern Mariana Islands, Guam,

American Samoa or the United States Virgin Islands or any

federally recognized Indian tribe as defined by the Secretary of

the Interior under section 104(a) of the Federally Recognized

Indian Tribe List Act of 1994 (Public Law 103-454, 25 U.S.C. §

479a-1).

"Trust company." The term includes:

(1) a national bank authorized to exercise trust powers

as authorized by 12 U.S.C. § 92a;

(2) a trust company as defined by section 102 of the

Banking Code of 1965; or

(3) an interstate bank as defined in section 102 of the

Banking Code of 1965 authorized to exercise the powers of a

trust company in this Commonwealth.

§ 5503. Services to legitimate cannabis-related businesses.

(a) Authorization to provide financial services.--A

financial institution authorized to engage in business in this

Commonwealth may provide financial services to or for the

benefit of a legitimate cannabis-related business and the

business associates of a legitimate cannabis-related business

subject to:

(1) the laws and regulations applicable to the provision

of financial services to other customers of the financial

institution;

(2) the ANY APPLICABLE consumer protection laws of this

Commonwealth;

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(3) any additional requirements applicable to the

institution established for the provision of services TO A

LEGITIMATE CANNABIS-RELATED BUSINESS OR ITS BUSINESS

ASSOCIATES by a Federal financial regulatory agency, the

Department of Banking and Securities or a financial

regulatory agency of the state under which the institution is

organized; and

(4) to the extent the institution is providing services

to a legitimate cannabis-related business or its business

associates in another jurisdiction, any additional

requirements applicable to the institution established for

the provision of THE services by a financial regulatory

agency of that jurisdiction.

(b) Authorization to provide insurance services.--An insurer

may provide insurance services to or for the benefit of a

legitimate cannabis-related business and the business associates

of a legitimate cannabis-related business subject to:

(1) the laws and regulations applicable to the provision

of insurance services to other customers of the insurer;

(2) the ANY APPLICABLE consumer protection laws of this

Commonwealth;

(3) any additional requirements applicable to the

insurer established for the provision of services TO A

LEGITIMATE CANNABIS-RELATED BUSINESS OR ITS BUSINESS

ASSOCIATES by the Insurance Department; and

(4) to the extent the insurer is providing services to a

legitimate cannabis-related business or its business

associates in another jurisdiction, any additional

requirements applicable to the insurer established for the

provision of THE services by an insurance regulatory agency

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of that jurisdiction.

chapter shall require a depository institution, an entity

performing a financial service for or in association with a

financial institution or an insurer to provide financial or

insurance services to a legitimate cannabis-related business or

the business associates of a legitimate cannabis-related

business or to any other business.

§ 5504. Protections for financial institutions, insurers,

legitimate cannabis-related businesses and business

associates.

(a) Actions of government agencies.-- Except as provided by

SUBJECT TO THE AUTHORIZATIONS OF section 5503(a) and (b)

(relating to services to legitimate cannabis-related

businesses), no agency or political subdivision of this

Commonwealth may:

(1) prohibit, penalize or otherwise discourage a

financial institution or insurer from providing financial or

insurance services to a legitimate cannabis-related business

or the business associates of a legitimate cannabis-related

business;

(2) recommend, incentivize or encourage a financial

institution or insurer not to offer financial or insurance

services to an account holder, or downgrade or cancel

services provided to the account holder, solely because the

account holder is a legitimate cannabis-related business or a

business associate of a legitimate cannabis-related business;

(3) take adverse or corrective supervisory action on a

loan made to a legitimate cannabis-related business or a

business associate of a legitimate cannabis-related business

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solely because the loan has been made to a legitimate

cannabis-related business or a business associate of a

legitimate cannabis-related business;

(4) prohibit or penalize a financial institution or

insurer performing financial or insurance services in

association with another financial institution or insurer

from providing financial or insurance services to a

legitimate cannabis-related business or a business associate

of a legitimate cannabis-related business; or

(5) subject the legal interest of a financial

institution in the collateral for a loan or another financial

service provided to a legitimate cannabis-related business or

the business associates of a legitimate cannabis-related

business to civil or criminal forfeiture under any laws of

this Commonwealth or initiate or participate in proceedings

for the civil or criminal forfeiture of a legal interest

under Federal law or under the laws of another state.

(b) Enforcement authority.--Nothing in this act shall

prevent the Department of Banking and Securities, the Insurance

Department or the Attorney General, in a manner consistent with

the requirements of section 506 of the act of May 15, 1933

(P.L.565, No.111), known as the Department of Banking and

Securities Code, from undertaking an enforcement action for

compliance with the requirements of section 5503(a) and (b) in a

manner consistent with subsection (a).

institution or insurer, or the directors, officers, employees,

agents, owners, shareholders or members of a financial

institution or insurer, shall be subject to a criminal

prosecution, sanction or claim for damages or any equitable

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remedy, solely because the institution or insurer is providing

financial or insurance services to or for the benefit of a

legitimate cannabis-related business or the business associates

of a legitimate cannabis-related business.

(d) Proceeds of legitimate cannabis-related business

activities.--The proceeds of any transaction involving the

activities of a legitimate cannabis-related business may not be

considered proceeds from an unlawful activity, solely because

the transaction involves the proceeds from a legitimate

cannabis-related business or a business associate of a

legitimate cannabis-related business.

(e) Rights and privileges.--No legitimate cannabis-related

business, or a business associate of a legitimate cannabis-

related business, shall be denied any right or privilege by a

State agency solely because of the business's or business

associate's lawful participation in the medical marijuana

program established under the act of April 17, 2016 (P.L.84,

No.16), known as the Medical Marijuana Act.

(f) Limited immunity.--If a legitimate cannabis-related

business fails to provide the notice required under section

5506(a) (relating to required disclosures) to a financial

institution or insurer, the financial institution or insurer

shall not be deemed in violation of this chapter solely because

the financial institution or insurer was not notified and

continued to provide services beyond the date at which such

services should or could have been terminated as a result of the

suspension or revocation of the permit, registration or

certification.

§ 5505. Access to information.

(a) Voluntary disclosures.--Section 1307 of the act of April

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17, 2016 (P.L.84, No.16), known as the Medical Marijuana Act,

shall not prohibit the voluntary disclosure of any records or

other information by a legitimate cannabis-related business, or

a business associate to a financial institution or insurer, as

necessary to obtain financial or insurance services to the

extent not prohibited by and consistent with any applicable

requirements of the Health Insurance Portability and

Accountability Act of 1996 (Public Law 104-191, 110 Stat. 1936)

privacy regulation as promulgated by the United States

Department of Health and Human Services under 45 CFR Pts. 160

(relating to general administrative requirements, 162 (relating

to administrative requirements) and 164 (relating to security

and privacy) and 16 CFR Pt. 313 (relating to privacy of consumer

financial information).

(b) Restrictions on use of records.--A financial

institution, or insurer receiving access to information under

subsection (a), the distribution of which would otherwise be

prohibited, may only use the information as necessary to satisfy

due diligence obligations required to provide financial or

insurance services to persons participating in the medical

marijuana program established under the Medical Marijuana Act

and may not disclose the information records to other persons

except for information:

(1) required for the filing of suspicious activity

reports with the United States Department of the Treasury or

the investigation of related reports;

(2) requested by the institution's primary regulator,

the Federal Deposit Insurance Corporation or the National

Credit Union Administration for the purposes of conducting an

examination of the institution;

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(3) as necessary to respond to court orders or subpoenas

after providing the person authorizing the release of the

records and the institution's primary regulator the

opportunity to object to the order or subpoena; or

(4) as authorized by a person who is the subject to the

confidential information.

§ 5506. Required disclosures.

(a) Notification by legitimate cannabis-related business.--

If a legitimate cannabis-related business obtains financial or

insurance services from a financial institution or insurer doing

business in this Commonwealth, the business shall, within five

business days, provide notice to the financial institution or

insurer if a cannabis-related permit, registration or

certification held by the business or its affiliates under

FEDERAL LAW, the laws of this Commonwealth or a law established

by another state is suspended or revoked.

(b) Penalty.--If a legitimate cannabis-related business

fails to give the notice required under subsection (a) to a

financial institution or insurer, the business or business

associate may be assessed a civil penalty up to $500 per day,

not to exceed $25,000, until the notice is provided. The

Department of Banking and Securities shall have authorization to

assess civil penalties for failure to give notice under this

section to a financial institution, and the Insurance Department

shall have authorization to assess civil penalties for failure

to give the notice under this section to an insurer.

§ 5507. Ordinary business deductions.

For each taxable year beginning on or after January 1, 2022,

NOTWITHSTANDING the provisions of section 280E of the Internal

Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 280E) shall

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not apply to legitimate cannabis-related businesses. Legitimate ,

A LEGITIMATE cannabis-related businesses BUSINESS shall be

allowed a deduction from a tax imposed under Articles III or IV

of the act of March 4, 1971 (P.L.6, No.2), known as the Tax

Reform Code of 1971, on ordinary and necessary expenses paid or

incurred during the taxable year.

§ 5508. Regulations and statements of policy.

The Department of Banking and Securities and the Insurance

Department may adopt statements of policy or regulations to

implement this chapter and to provide guidance to financial

institutions and insurers providing financial or insurance

services to legitimate cannabis-related businesses and business

associates of a legitimate cannabis-related business.

Section 2. The addition of 12 Pa.C.S. §§ 5503 and 5504 shall

apply to the provision of financial or insurance services to a

legitimate cannabis-related business or a business associate of

a legitimate cannabis-related business on or after the effective

date of this section.

Section 3. Repeals are as follows:

(1) The General Assembly declares that the repeals under

paragraph (2) are necessary to effectuate the addition of 12

Pa.C.S. § 5507.

(2) Articles III and IV of the act of March 4, 1971

(P.L.6, No.2), known as the Tax Reform Code of 1971, are

repealed insofar as they are inconsistent with 12 Pa.C.S. §

5507.

Section 4. This act shall take effect as follows:

(1) The addition of 12 Pa.C.S. § 5505 shall take effect

in 90 days.

(2) The remainder of this act shall take effect

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immediately. IMMEDIATELY.

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