Equity Services Inc. (ESI) is issuing guidance on handling accounts associated with Marijuana or Psychedelic Related Businesses (MRBs), and Marijuana or Psychedelic Related Persons (MRPs) due to increasing liberalization of laws at the state level. While several states have legalized marijuana and certain psychedelics, federal law still classifies these substances as illegal under the Controlled Substances Act (CSA). This means that dispensaries, growers, and other businesses sanctioned under state law remain federally illegal. Additionally, this policy extends to psychedelics, including LSD, psilocin, and mescaline, which are also classified as Schedule I substances under federal law.
Prohibition of Accounts Relating to Marijuana or Psychedelic Businesses and Persons
ESI does not permit accounts for individuals or entities found to be engaged in business activities that are prohibited under federal law, including those whose activities are regulated, licensed and/or approved at the state or local level. This includes, but is not limited to:
Marijuana or Psychedelic Related Businesses (MRBs)
- Entities that manufacture, grow, distribute, or dispense marijuana or psychedelics (i.e., in the supply chain) and entities that have a financial investment or controlling interest in those companies (e.g., shell or management companies).
- Entities whose revenue is derived from equipment, products, materials (e.g., marijuana paraphernalia) intended or designed for use by a Direct MRB or services provided to Direct MRBs.
Marijuana or Psychedelic Related Person (MRPs)
- Employees, including officers, directors, independent board members and individuals directly or through an entity with a financial investment or controlling interest of a direct or ancillary MRB.
- Individuals (e.g., contractors, accountants, landlords) who provide services to Direct or Ancillary MRBs where payment transactions including, but not limited to, securities, cash, cash-like instruments are involved.
Reporting of Accounts Relating to Marijuana & Psychedelic Businesses
Accounts held by entities or persons identified as MRBs or MRPs are not permitted to be opened. If you become aware that a client or potential client is engaged in such activities, immediately report this to your supervisor and Compliance.
Questions
If you have any questions regarding the above, please feel free to contact ESI Compliance at 800-344-7437.
TC7807622(0425)1
