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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.
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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;
(C) an incorporated institution under the act of
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.
(c) No requirement to provide services.--Nothing in this
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).
(c) Criminal prosecution and civil claims.--No financial
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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