Amidst Unclear Federal Direction, States Move to Protect Cannabis Cash
May 18, 2017
Considering cannabis sales nearly eclipsed 7 billion dollars last year, one would think there’s a thriving financial services economy providing banking and other ancillary products, right? Wrong. Even though legal cannabis is generating more revenue than tequila or Girl Scout cookies, the banking industry won’t touch money linked to cannabis for fear of federal intervention due to cannabis’ Schedule 1 status. Simply put, as long as cannabis is federally illegal, most major banking institutions see too much risk in accepting the business.
But that might be changing soon. Citing public safety as motivation, a bipartisan group of Senators led by Oregon’s Jeff Merkley has introduced the Secure and Fair Enforcement (SAFE) Banking Act, which would allow financial institutions to accept cannabis cash without the threat of federal interference.
“Forcing legal businesses to operate in all cash is an invitation to money laundering and robbery,” said Merkley. “It’s absurd that cannabis business owners in Oregon have to shuttle around gym bags full of cash to pay their taxes or compensate their employees. This is a public safety issue, and rather than making it even harder for banks to serve these legal businesses, President Trump and Attorney General Sessions should work with us to end this unnecessary risk for communities across America.” After all, the goal of a regulated market is to eliminate illicit activity, not promote it through a different avenue.
The bill, which currently has 8 co-sponsors, would prevent federal banking regulators from:
- Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate, state-sanctioned and regulated cannabis business, or an associated business (such as a lawyer or landlord providing services to a legal cannabis business);
- Terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned cannabis business or associated business;
- Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
- Taking any action on a loan to an owner or operator of a cannabis-related business.
Republican Senator Cory Gardner, a co-sponsor of the bill, knows all too well the challenges faced by cannabis businesses, “conflicting federal and state marijuana laws make it difficult for legitimate businesses to use the basic financial services they need access to and this bipartisan legislation gives them that access they need. We must also take into account the risk to public safety as these businesses are being forced to carry around bags of money to pay for their employees and rent. Legal businesses should not be treated like this, and I’m glad that Republicans and Democrats are working together to address this issue.”
Bipartisan support will be essential if the bill has any hope of becoming a law, especially given the recent rumblings of a renewed War on Drugs. It seems strange that, with unprecedented number in favor of legalization (over 70% of the country believes that medical cannabis should be legalized), the Justice Department is attempting to revitalize a failed policy, however, it is reassuring to see so many of our elected officials standing up for their constituents in the face of federal pressure.
The SAFE Act is not the only pro-cannabis legislation making headlines this week. Vermont is a Governor’s signature away from becoming the 9th state to legalize cannabis for adult use and New Jersey is confident they’ll pass adult use once Governor Chris Christie is replaced.
If you’re inclined, NORML has created a pre-written letter that can be personalized and sent to your member of Congress to request support for the SAFE Act, we encourage you to take a few minutes and make your voice heard.
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