Financial committee members pressing for proper banking regulations for cannabis businesses
Nearly 50 percent of the United States and its territories are legislatively taking a stand in favor of passing legislation which would allow marijuana businesses to participate in normal banking processes.
Financial regulators in 25 states and U.S. territories have banned together to put pressure on Congress to pass marijuana banking legislation.
"It is incumbent on Congress to resolve the conflict between state cannabis programs and federal statutes that effectively create unnecessary risk for banks seeking to operate in this space. The looming threat of civil actions, forfeiture of assets, reputational risk, and criminal penalties is not conducive to a legal, regulated marketplace," the officials wrote to House and Senate Democratic and Republican leaders in a letter on Monday.
"We urge Congress to consider legislation that creates a safe harbor for financial institutions to serve a state-compliant business or entrusts sovereign states with the full oversight and jurisdiction of marijuana-related activity," the regulators continued.
"Establishing a safe harbor for banks to serve these entities would help reduce the risk associated with large cash-and-carry operations and bring the safeguards, activities, and sales associated with this business into the regulatory reporting compliance framework."
The lack of legislation is starting to show
The number of states legalizing marijuana use, for either recreational purposes or medicinal use, is rapidly increasing. What’s not rising to the occasion? Regulations regarding banking for the cash-only cannabis business industry, that's what.
As marijuana is still a federally classified Schedule I drug, many banks are hesitant to work with marijuana businesses. As such, everyone involved in the marijuana industry, from growers to retailers, are forced to use cash to conduct daily business, making them easy pickings for robbers and auditors alike.
Back in March, the House Financial Services Committee approved a bill that proposes to protect banks from federal regulators for providing services to state-licensed marijuana businesses. The bill passed with a bipartisan vote of 45-for to 15-opposed, and is due to be heard on the House floor in the coming weeks.
Additionally, more than one-fifth of the U.S. Senate introduced legislation demanding cannabis banking.
Pennsylvania Secretary of Banking and Securities, Robin L. Wiessmann, filed an official letter, co-signed by regulators from a myriad of states including Alaska, Colorado, New York, and even Utah, all clamoring for Congress to fix the cannabis banking issue.
“A majority of states now have medical marijuana programs, and it has become increasingly necessary to craft policy to respond to emerging challenges in this rapidly growing industry,” Wiessmann said in a press release.
“Establishing a safe harbor for banks to serve these entities would help reduce the risk associated with large cash-and-carry operations and bring the safeguards, activities, and sales associated with this business into the regulatory reporting compliance framework.”
Trusting Congress before the Treasury
Unfortunately, the Trump administration is calling on Congress to tackle the marijuana banking issue rather than have the Treasury take it on.
“There is not a Treasury solution to this. There is not a regulator solution to this,” Treasury Secretary Steven Mnuchin said during a House hearing last week. “If this is something that Congress wants to look at on a bipartisan basis, I’d encourage [them] to do this.
“This is something where there is a conflict between federal and state law that we and the regulators have no way of dealing with,” Mnuchin said. He has stated that he will have his staff review pending marijuana banking legislation and may provide an endorsement within the coming weeks.