A subcommittee in the U.S. House of Representatives recently took up a bill that would protect banks and their employees doing business with legal cannabis enterprises. On February 13th members of the House Financial Services Subcommittee heard testimony from representatives in the financial sector, the cannabis industry, law enforcement, and the treasurer of California in support of legislation that would make it easier for banks to work with legal cannabis businesses without fear of federal prosecution.
In more than 30 states cannabis is legal in some form. However, it is illegal on the federal level, meaning that many banks opt out of helping companies in the industry. A recent report that came out by FINCEN stated that there are approximately 375 banks and 111 credit unions in the entire nation taking money from cannabis companies. Considering the legal cannabis market is projected to reach approximately $146 Billion by 2025 this is a very small number.
The SAFE banking act would help to remove a lot of headaches that banks taking cannabis funds currently have, such as Suspicious Activity Reports (SARs) and Currency Transaction Reporting (CTRS). Banks eventually have to consider how they handle employees of cannabis companies or ancillary service providers.
If a cannabis employee wants to open a Health Savings Account with your bank would you do it?
Would you work with a utility company who is providing power to a cannabis grow facility?
Without a legal bank account cannabis companies operate a cash business. This creates for many security concerns, such as theft and robberies. Cannabis business owners are paying their taxes with suitcases full of cash. How are they securing the transportation of these funds? All of these concerns are what supporters of the SAFE Banking ACT are voicing. Representative Denny Heck (D-Washington) who is co-sponsoring the legislation stated “We have the power in this committee to prevent murders and armed robberies, and we must use it, we must use it now.” In contrary, republican Congressman Blaine Luetkemeyer stated “congress is getting the cart before the horse.” “You can’t live in limbo here, which is where we’re at right now. You can’t have laws in conflict with one another.” Meaning the decriminalization of cannabis on a federal level needs to be addressed before the banking issue.
Is there enough political motivation to push the SAFE Banking Act Through? Can a Republican controlled senate, who has yet to take up the issue, be swayed?
As you can see there are still a lot more questions than answers.