Hearing to Discuss Cannabis Industry's Banking Challenges
July 18, 2019
By: Kelly Hayes
Next week, the U.S. Senate Committee on Banking, Housing and Urban Affairs will hear from U.S. Senators, Banking representatives, and Cannabis industry leaders to discuss the numerous banking challenges for the cannabis industry.
The witnesses scheduled to speak at the Hearing include United States Senators, Cory Gardner (of Colorado) and Jeff Merkley (of Oregon). Both Senators are also supporters of the “Secure and Fair Enforcement Banking Act” (“SAFE”), a banking bill that proposes to open up safe harbors to financial institutions working with cannabis businesses in states where cannabis is now legal. Additional witnesses scheduled to speak include, Chief Risk Officer of Maps Credit Union, Rachel Pross; President and Chief Executive Officer of Citywide Banks, Joanne Sherwood; Vice President of Government Affairs of Smart Approaches to Marijuana, Garth Van Meter; and Chief Executive Officer and Owner of LivWell Enlightened Health, John Lord.
Currently, thirty-three (33) states, the District of Columbia, and many U.S. territories have legalized marijuana to some degree, albeit medical or for adult-use. However, federal law still prohibits the possession and distribution of marijuana under the federal Controlled Substances Act (“CSA”).
Financial institutions are subject to federal laws and regulations including potential civil and criminal liabilities under the CSA, anti-money-laundering statutes, the Banking Secrecy Act, and the Patriot Act. Due to the significant risks involved, many financial institutions have been wary in dealing with marijuana businesses, even in states that have legalized marijuana. These challenges continue to force marijuana businesses into a “legal gray area” of dealing in cash-only transactions, and transporting and storing large amounts of currency.
In the last couple of months, state banking supervisors, the state bankers associations, and even the National Association of Attorneys General have all called on Congress to take action now to advance federal legislation to allow financial institutions to serve the needs of their local communities.
“Leaving the cannabis industry unbanked presents serious public safety, revenue administration, and legal compliance concerns and must be remedied immediately,” a May 2019 Letter from the 50 state bankers associations reads. “Although we do not take a position on the legalization of marijuana, our members are committed to serving the financial needs of their communities – including those that have voted to legalize cannabis. We believe federal action is necessary and support a solution that would allow banks to serve cannabis-related businesses in states where the activity is legal.”
Next week’s Senate Committee Hearing comes just over a week after the U.S. House of Representative’s Subcommittee held the first-ever hearing on the need to reform our nation’s marijuana laws.
The Senate Committee Hearing entitled, “Challenges for Cannabis and Banking: Outside Perspectives” is scheduled for Tuesday, July 25, 2019 at 10 a.m.