2022 Pennsylvania Consolidated & Unconsolidated Statutes
Act 56 - COMMERCE AND TRADE (12 PA.C.S.) - LEGITIMATE CANNABIS-RELATED BUSINESS, INCENTIVE-BASED SAVINGS PROGRAM AND IMPOSING A PENALTY

Session of 2022

No. 2022-56

 

HB 331

 

AN ACT

 

Amending Title 12 (Commerce and Trade) of the Pennsylvania Consolidated Statutes, providing for legitimate cannabis-related business and incentive-based savings program; and imposing a penalty.

 

The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

 

Section 1.  The General Assembly finds and declares as follows:

(1)  The headwinds to the economy on a national and State level are significant.

(2)  The financial stability of the citizens of this Commonwealth is challenged.

(3)  It is important to authorize and provide a regulatory framework for financial institutions to conduct savings promotion programs to encourage robust saving habits and improve financial literacy.

(4)  The framework under paragraph (3) should include financial services for legitimate cannabis-related businesses.

Section 2.  Title 12 of the Pennsylvania Consolidated Statutes is amended by adding chapters 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.  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. § 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 a Federal financial regulatory agency 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);

(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 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 (60 Stat. 1087, 7 U.S.C. § 1621 et seq.).

"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 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)  any applicable consumer protection laws of this Commonwealth;

(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)  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)  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)  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)  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.--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 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) or (b) (relating to services to legitimate cannabis-related businesses) in a manner consistent with subsection (a).

(c)  Criminal prosecution and civil claims.--Subject to subsection (h), 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.

(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.

(g)  Exclusion.--This chapter shall not apply to the cultivation, production, manufacture, sale, transportation, display, dispensing, distribution or purchase of cannabis for recreational use within this Commonwealth in a manner contrary to the act of April 14, 1972 (P.L.233, No.64), known as The Controlled Substance, Drug, Device and Cosmetic Act, or any actions in violation of the Medical Marijuana Act except as otherwise provided by this chapter.

(h)  Requirements.--The protections provided by this section to a financial institution or insurer and to the directors, officers, employees, agents, owners, shareholders or members of the institution or insurer are subject to the institution's or insurer's material compliance with the requirements of section 5503(a) and (b) and reasonable due diligence to determine that a legitimate cannabis-related business or a business associate of a legitimate cannabis-related business is in compliance with the laws of this Commonwealth and the laws of other states in which the cannabis-related business is located, or with any applicable Federal laws, which provide authorization for the operation of a legitimate cannabis-related business.

§ 5505.  Access to information.

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

(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 of 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.  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.

CHAPTER 57

INCENTIVE-BASED SAVINGS PROGRAM

Sec.

5701.  Legislative intent.

5702.  Definitions.

5703.  Savings promotion program.

5704.  Compliance with Federal regulations.

5705.  Qualified financial program.

5706.  Terms and conditions.

5707.  Maintenance of books and records.

§ 5701.  Legislative intent.

The intent of this chapter is to authorize and provide a regulatory framework for financial institutions to conduct savings promotion programs to encourage robust saving habits and improve financial literacy.

§ 5702.  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:

"Eligible financial institution."  Any of the following:

(1)  an insured credit union; or

(2)  an insured depository institution.

"Eligible individual."  An individual who:

(1)  is at least 18 years of age;

(2)  is a member or customer of the eligible financial institution conducting the savings promotion program; and

(3)  maintains a qualified account with the eligible financial institution conducting the savings promotion program.

"Insured credit union."  As defined in section 101 of the Federal Credit Union Act (48 Stat. 1216, 12 U.S.C. § 1752).

"Insured depository institution."  As defined in section 3 of the Federal Deposit Insurance Act (64 Stat. 873, 12 U.S.C. § 1813).

"Prudential regulator."  As defined in section 1002 of the Consumer Financial Protection Act of 2010 (Public Law 111-203, 124 Stat. 1955, 12 U.S.C. § 5481).

"Qualified account."  A savings account, time deposit or savings program offered to an eligible individual by an eligible financial institution pursuant to a savings promotion program. The term includes a share account and an account where the eligible individual has an interest individually or jointly with another eligible individual.

"Qualified financial program."  A program offered by an eligible financial institution under section 5705 (relating to qualified financial program).

"Savings promotion program."  A contest in which the sole consideration required for a chance of winning designated prizes is obtained by the deposit of a specified amount of money in a qualified account or other savings program of which each ticket or entry has an equal chance of being drawn.

§ 5703.  Savings promotion program.

(a)  Authorization.--Notwithstanding any prohibitions on lotteries or gambling provided by the laws of this Commonwealth, including 18 Pa.C.S. §§ 5512 (relating to lotteries, etc.), 5513 (relating to gambling devices, gambling, etc.) and 5514 (relating to pool selling and bookmaking), an eligible financial institution may conduct a savings promotion program and any activity conducted in connection with the savings promotion program, including, but not limited to:

(1)  the deposit of a minimum specified amount of money in a qualified account for a minimum length of time;

(2)  the participation in a qualified financial program offered by the eligible financial institution;

(3)  the transmission of any advertisement, list of prizes or other information concerning the savings promotion program;

(4)  the offering, facilitation and acceptance of deposits, withdrawals or other transactions in connection with the savings promotion program;

(5)  the transmission of any information relating to the savings promotion program, including account balance and transaction information;

(6)  the deposit or transmission of prizes awarded in the savings promotion program as well as notification or publication of the deposit or transmission; and

(7)  the establishment and operation of qualified financial programs.

(b)  Limitation.--An eligible financial institution may not conduct a savings promotion program in a way that jeopardizes the eligible financial institution's safety and soundness or misleads an eligible individual or the public.

(c)  Third-party participants.--An eligible financial institution may offer a savings promotion program in conjunction with a third-party participant that provides administrative support, funding or other service.

§ 5704.  Compliance with Federal regulations.

An eligible financial institution may offer a savings promotion program only to the extent permitted by Federal law, including any regulations promulgated by the institution's appropriate prudential regulator.

§ 5705.  Qualified financial program.

A qualified financial program offered under section 5703(a)(2) (relating to savings promotion program) must include programs to encourage an eligible individual to do at least one of the following:

(1)  Deposit or transfer money into a qualified account on a recurring or automatic basis.

(2)  Refinance or consolidate existing debt to obtain a lower interest rate.

(3)  Pay off or reduce outstanding balances to lower the eligible individual's total debt ratio or revolving debt ratio.

(4)  Prepare a budget or a debt-reduction plan.

(5)  Attend financial literacy seminars or counseling sessions sponsored by the eligible financial institution that are offered free of charge.

(6)  Use free online financial education, budgeting or debt-reduction tools.

§ 5706.  Terms and conditions.

(a)  Disclosure.--An eligible financial institution conducting a savings promotion program shall disclose to the public and each participant the terms and conditions of the savings promotion program. The terms and conditions shall be posted in a location where entries may be submitted and shall be included in printed materials or electronic media promoting the savings promotion program.

(b)  Content.--Terms and conditions for a savings promotion program shall include language specifying that:

(1)  No other action, purchase or other consideration is necessary for an entry in the savings promotion program.

(2)  No action or purchase of goods or services improves the odds of winning.

(3)  Each entry has the same odds of winning the savings promotion program.

(4)  The odds of winning the savings promotion program will be determined based on the number of entries received.

(5)  The winner is responsible for all applicable Federal, State and local taxes.

(6)  Participation in a qualified financial program is offered to any qualified individual participating in the savings promotion program.

(7)  Participation in a savings promotion program presents no financial risk to an eligible individual.

§ 5707.  Maintenance of books and records.

An eligible financial institution that conducts a savings promotion program under this chapter shall maintain books and records relating to the conduct of the savings promotion program sufficient to facilitate an audit of the savings promotion program. The financial institution shall keep a record of the names of winners of all savings promotion programs, which shall be available for inspection by the financial institution's customers.

Section 3.  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 4.  This act shall take effect as follows:

(1)  The addition of 12 Pa.C.S. Ch. 57 shall take effect in 60 days.

(2)  The remainder of this act shall take effect immediately.

 

APPROVED--The 11th day of July, A.D. 2022.

 

TOM WOLF