The R Street Institute welcomes today’s hearing by the U.S. House Committee on Financial Services exploring access to banking services for legitimate cannabis-related businesses.
Despite laws providing for the legal distribution of medicinal marijuana in 32 states and for decriminalization of recreational marijuana in 10 states plus the District of Columbia, the federal Controlled Substances Act and myriad banking statutes and regulations continue to make it difficult for banks and credit unions to provide financial services to those businesses that operate in accordance with state cannabis laws.
Though there has been progress in lenders’ willingness to serve the legal cannabis industry, the potential for criminal and civil liability, including money-laundering, remains a stumbling block to bringing more deposits into the traditional banking sector, according to R.J. Lehmann, R Street’s director of finance, insurance and trade policy. According to the most recent data from the U.S. Treasury Department’s Financial Crime Enforcement Network, there were 375 banks and 111 credit unions serving cannabis-related business accounts as of the fourth quarter of 2018.
“Even where lenders are providing financial services to the legal marijuana industry, the compliance processes that currently would be appropriate to service this sector effectively are daunting and beyond what many smaller lenders could manage,” Lehmann said. “We need federal law to provide guidance, clarity and a permanent safe harbor for depositories who work with state-sanctioned cannabis businesses.”
The Secure And Fair Enforcement (SAFE) Banking Act of 2019, introduced by Rep. Ed Perlmutter, D-Colo., would provide exactly that. The bill would ensure that federal banking and credit union regulators could not sanction regulated lenders or limit their access to deposit insurance on grounds that they provided service to legitimate cannabis businesses. Reps. Steve Stivers and Warren Davidson, both R-Ohio, recently joined Perlmutter and Rep. Denny Heck, D-Wash., as sponsors of the legislation.
“We extend our thanks to Chairwoman Waters for convening this hearing and moving this topic to the top of the committee’s agenda. In an era of often fractious partisan divides, Rep. Perlmutter’s legislation offers an opportunity for bipartisan consensus and real solutions,” Lehmann said.