S2819

An Act concerning cannabis and the protection of insurers and financial institutions and supplementing Title 17 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

“Business associate” means a person that is a customer or supplier of goods or services to or for the benefit of an alternative treatment center, cannabis cultivator, cannabis delivery service, cannabis distributor, cannabis testing facility, or any other cannabis establishment, as these terms are defined pursuant to section 3 of P.L.2021, c.16 (C.24:6I-33), or an officer or director, owner, operator, shareholder, member, employee, agent or financial backer of a cannabis establishment.

“Cannabis” means “marihuana” as defined pursuant to section 2 of the “New Jersey Controlled Dangerous Substances Act,” P.L.1970, c.226 (C.24:2l-2).

“Cannabis product” means a product that contains cannabis, a cannabis extract or a cannabis concentrate, including, but not limited to, edible product, beverages, topicals, ointments, oils, tinctures, capsules, pills, suppositories, or inhaled products.

“Department” means the Department of Banking and Insurance.

“Depository institution” means:

(1) a depository institution as defined in section 3 of the Federal “Deposit Insurance Act,” 12 U.S.C. s.1811;

(2) a federal credit union as defined in section 101 of the “Federal Credit Union Act,” 12 U.S.C. s.1751 et seq; or

(3) a State credit union as defined in section 101 of the “Federal Credit Union Act,” 12 U.S.C. s.1751 et seq.

“Federal financial regulatory agency” means the Federal Reserve System, the United States Department of the Treasury, the Office of the Comptroller of the Currency, the National Credit Union Administration, the Federal Deposit Insurance Corporation, the United States Securities and Exchange Commission, and the Consumer Financial Protection Bureau.

“Financial institution” means a financial institution as defined pursuant to section 2 of P.L.1998, c.121 (C.17:16T-2);

“Financial service” means a financial product or service:

(1) as defined by section 5481 of the “Dodd-Frank Wall Street Reform and Consumer Protection act,” 12 U.S.C. s.5301 et seq.;

(2) permitted to be provided under the authority of:

(a) a national bank or a financial subsidiary pursuant to 12 U.S.C. ss.24, 24a, and 92a;

(b) a federal credit union pursuant to the “Federal Credit Union Act,” 12 U.S.C. s.1751 et seq.;

(c) a corporation, as defined pursuant to section 2.1 of the “New Jersey Business Corporation Act,” P.L.1988, c.94 (C.14A:1-2.1);

(d) a credit union, pursuant to the “The Credit Union Act of 1984,” P.L.1984, c.171 (C.17:13-79 et seq.);

(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 federal “Investment Company Act of 1940,” 15 U.S.C. s.80a-1et seq.;

(f) a person registered, or exempt from registration, to:

(i) offer or sell any security, pursuant to the federal “Securities Act of 1933,” 15 U.S.C. s.77a et seq.;

(ii) act as an exchange, a broker, dealer, transfer agent or clearing agent pursuant to the federal “Securities Exchange Act of 1934,” 15 U.S.C. s.78a et seq.;

(iii) act as an investment adviser pursuant to the federal “Investment Advisers Act of 1940,” 15 U.S.C. s.80b-1 et seq.; or

(iv) act as an investment company pursuant to the federal “Investment Company Act of 1940,” 15 U.S.C. s. s.80a-1et seq.; or

(g) a person acting as a broker-dealer, agent, or investment adviser pursuant to the “Uniform Securities Law,” P.L.1967, c.93 (C.49:3-47 et seq.); or

(3) that 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” means the plant Cannabis sativa L. and any part of that plant, as defined pursuant to section 3 of P.L.2019, c.238 (C.4:28-8).

“Insurance service” means a service authorized to be provided by an insurer in this State.

“Insurer” means an entity or person authorized by the department to transact the business of insurance in this State or designated as a surplus lines insurer as defined pursuant to section 7 of P.L.1960, c.32 (C.17:22-6.41).

“Legitimate cannabis-related business” means 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 the laws of this State or a law established by another state.

“State” means 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, the United States Virgin Islands, or any federally recognized Indian tribe as defined by the Secretary of the Interior under the “Federally Recognized Indian Tribe List Act of 1994,” 25 U.S.C. s.5131.

“Trust company” means:

(1) a national bank authorized to exercise trust powers as authorized by 12 U.S.C. s.92a; or

(2) a bank or trust company organized under the laws of this State.

2. a. A financial institution authorized to engage in business in this State 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) any applicable consumer protection laws of this State;

(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 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. 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) any applicable consumer protection laws of this State;

(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 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 of that jurisdiction.

c. Nothing in this section 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.

d. Any violation of the requirements of subsections a. and b. of this section shall be a violation of P.L.1960, c.39 (C.56:8-1 et seq.).

3. a. Subject to the authorizations of subsections a. and b. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), no agency or political subdivision of this State shall:
(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 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 State 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. 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 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.

c. The proceeds of any transaction involving the activities of a legitimate cannabis-related business shall 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.

d. 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 “New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act,” P.L.2021, c.16 (C.24:6I-31 et al.).

e. If a legitimate cannabis-related business fails to provide the notice required pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) to a financial institution or insurer, the financial institution or insurer shall not be deemed in violation of this section solely because the financial institution or insurer was not notified and continued to provide services beyond the date at which the services should or could have been terminated as a result of the suspension or revocation of the permit, registration, or certification.

4. a. A legitimate cannabis-related business that obtains financial or insurance services from a financial institution or insurer doing business in this State shall, within five business days, provide notice to the financial institution or insurer if a license, permit, registration, or certification held by the business or its affiliates under federal law, the laws of this State, or a law established by another state is suspended or revoked.

b. If a legitimate cannabis-related business fails to give the notice required under subsection a. of this section to a financial institution or insurer, the business or business associate may be assessed a civil penalty not to exceed $500 per day until the notice is provided; however, this amount shall not exceed $25,000. A civil penalty imposed under this subsection shall be collected by the department pursuant to the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.).

5. The department shall adopt rules and regulations as necessary to implement and administer P.L. , c. (C. ) (pending before the Legislature as this bill) in accordance with the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.).

6. This act shall take effect immediately.

STATEMENT

This bill protects financial institutions and insurers doing business with the cannabis industry from being penalized by State regulators.

Under the bill, a financial institution or insurer authorized to engage in business in this State may provide financial or 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 financial or insurance services to other customers of the financial institution or insurer;

(2) any applicable consumer protection laws of this State;

(3) any additional requirements applicable to the financial institution or insurer established for the provision of services to a legitimate cannabis-related business or its business associates by a federal regulatory agency or the department; and

(4) to the extent the financial institution or insurer is providing services to a legitimate cannabis-related business or its business associates in another jurisdiction, any additional requirements applicable to the financial institution or insurer established for the provision of the services by a regulatory agency of that jurisdiction.

The bill provides that no agency or political subdivision of this State will:

(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;

Additionally, under the bill, no financial institution or insurer, or the directors, officers, employees, agents, owners, shareholders or members of a financial institution or insurer, will be subject to a criminal prosecution, sanction or claim for damages or any equitable 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.

Finally, this bill provides that a legitimate cannabis-related business provide notice to a financial institution or insurer if a license, permit, registration or certification held by the business or its affiliates under federal law, the laws of this State or a law established by another state is suspended or revoked.