The National Credit Union Administration has announced it will not punish credit unions for providing financial services to cannabis companies in states where cannabis is legal.
National Credit Union Administration (NCUA) Chairman Rodney Hood announced last week that credit unions who would like to do business with cannabis companies will not be sanctioned if they follow industry rules.
“It’s a business decision for the credit unions if they want to take the deposits,” Hood stated during an interview with Credit Union Times. “We don’t get involved with micro-managing credit unions.”
The NCUA is a federal agency tasked with regulating federal credit unions and insuring their deposits.
Hood reminded credit union leaders that they must comply with the rules set forth by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), file Suspicious Activity Reports when necessary, and must firmly adhere to other rules pertaining to the matter. If each of those guidelines is met, those credit unions will not be penalized for meeting the financial needs of cannabis businesses.
Although the potential penalties will not come from the NCUA, which is responsible for creating and maintaining regulations, cannabis remains illegal at the federal level. Transporting or transmitting any money that is known to have been derived from the circulation of cannabis is illegal and has forced many cannabis companies to primarily work on a cash-only basis.
As more states legalize cannabis and the potential financial gain from the rising industry grows, more financial institutions have already been risking federal repercussions by providing services to cannabis businesses. According to a report released by the (FinCEN), 493 banks and 140 credit unions were providing financial services to cannabis-related businesses as of March 2019, a sharp increase from the previous year when only 411 such institutions were counted.
A 2017 report revealed that the four major banking institutions in the U.S. were providing financial services to businesses in the cannabis industry. According to the MRB Monitor, Bank of America, Citigroup, JP Morgan, and Wells Fargo all provided some account services for cannabis businesses.
SAFE Banking Act Would Fix Cannabis Banking Issue
Bank and financial groups across the U.S. have been pushing for the federal government to take action to ease fears of punishment associated with cannabis banking. In May, state banking associations in all 50 states and Puerto Rico sent a letter to the Senate Banking Committee urging members to allow marijuana-related businesses full access to banks without penalties.
The Secure and Fair Enforcement (SAFE) Banking Act (H.R. 1595), was introduced to resolve the cannabis banking issue and passed a House committee in March. The SAFE Act, sponsored by U.S. Rep. Ed Perlmutter (D-CO), allows cannabis-related businesses in states and territories with existing regulatory structures to access the federal banking system. The act has yet to pass the full House or Senate floor.
A long list of state attorney generals sent their support for the SAFE Act in May. The bipartisan SAFE Act faces an uphill battle on the Senate floor, as the Committee on Banking, Housing, and Urban Affairs is led by Idaho Senator Mike Carpo, who has historically held a rigid anti-cannabis stance.
A report released in May by the Congressional Budget Office (CBO) showed an estimated savings of $4 million from 2019-2029 if the SAFE Act is passed and enacted by the end of fiscal year 2019 (September 30).
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