Cannabis and Hemp-Derived Products San Francisco, CA August 2019

Elizabeth Scofield Director, Franchise Risk Management Key Terms: What are we talking about?

Cannabis & Marijuana THC & CBD Industrial Hemp

• Cannabis is a family of plants. • THC • Industrial hemp is the term • Hemp and marijuana are two the psychoactive chemical given to the stalk, seeds, oil, different species of plants within that family. in marijuana, responsible and leaves of the cannabis • Marijuana—also called weed, for most of the intoxicating sativa plant herb, pot, grass, bud, ganja, effects • Legally, hemp may not Mary Jane, and a vast number of other slang • CBD - is derived directly contain more than 0.3 terms—is a greenish-gray from the hemp plant. While percent THC on a dry mixture of the dried flowers of Cannabis sativa CBD is a component of weight basis marijuana (one of hundreds), by itself it does not cause a “high”

2 Visa Security Summit – June 2019 Visa Public Marijuana: Legal Landscape

Federal • Schedule I controlled substance under the federal Controlled Substances Act (CSA) – No accepted medical use, high potential for abuse – Distribution of marijuana is a felony, proceeds and instrumentalities subject to asset forfeiture State • 33 states and DC allow medical use of marijuana • 14 additional states have medical programs that are limited to low-THC CBD products • 11 states and DC have legalized marijuana for recreational use

3 Visa Security Summit – June 2019 Visa Public Visa Policy: Marijuana:

• Despite the number of states that have legalized the purchase and sale of marijuana to some degree, marijuana remains illegal under federal law • Visa’s official position on transactions involving the purchase or sale of marijuana in the U.S. is as follows: “In offering our payment services, Visa adheres to the rule of law and seeks to protect the integrity of the Visa payment system. Although several U.S. states have legalized marijuana for medical or recreational use, marijuana nevertheless remains illegal under federal law. As such, Visa Prohibits all transactions involving the sale or distribution of marijuana, until such time as federal law allows”

4 Visa Security Summit – June 2019 Visa Public CBD and the 2018 Farm Bill

The 2018 Farm Bill amended the Controlled Substances Act in two ways: 1. It removed hemp from the definition of marijuana of the Controlled Substances Act 2. It created an exception for THC in hemp. Legally, hemp may not contain more than 0.3 percent THC on a dry weight basis The 2018 Farm Bill does not remove all barriers to the production and sale of CBD products made from hemp • According to the Food and Drug Administration (FDA), under the Food, Drug, and Cosmetics Act (FDCA), it is illegal to market CBD as a dietary supplement or otherwise introduce it into the food supply • Additionally CBD products may not be marketed with express or implied claims that they are intended to cure, mitigate, prevent, or treat a disease (or any similar verbiage) unless the FDA has approved the product as a drug

Source: US Food and Drug Administration

5 Visa Security Summit – June 2019 Visa Public CBD & Visa Are CBD merchants allowed?

Acquirers and their third parties must ensure the following prior to onboarding a merchant selling CBD: • CBD products are not marketed as a food product or dietary supplement • Merchants do not make disease claims about CBD, including on product labels, websites, and any related social media • Merchants are only selling hemp-derived CBD in jurisdictions where it is legal

6 Visa Security Summit – June 2019 Visa Public Pending Federal Legislation

Secure And Fair Enforcement (SAFE) Banking Act • Prohibits Treasury Dept. from punishing banks for maintaining accounts for state- legal cannabis businesses • Advanced by the House Financial Services Committee on a 45-15 vote in March • Considered by the Senate Banking Committee during a July 23 hearing Strengthening the Tenth Amendment Through Entrusting States (STATES) Act • Amends the CSA to state its provisions do not apply to those in compliance with state laws related to the manufacture, possession and distribution of marijuana • Last year, President Trump stated that he would likely support this bill

Source: 2019 Akin Gump Strauss Hauer & Feld LLP

7 Visa Security Summit – June 2019 Visa Public