The state associations sent a joint letter in support of legislation that would allow financial institutions to service marijuana businesses without fear of federal enforcement.
State Banking Associations in all 50 states and Puerto Rico are urging the United States Senate to allow cannabis businesses full access to banks without repercussions.
The state associations directed a letter to the Senate Banking Committee, which has jurisdiction over the issue, urging members to take action, saying they “support a thorough examination of the issue and potential legislative solutions by the committee. We appreciate that there are broader public policy questions surrounding cannabis legalization that merit debate, but we ask that you focus narrowly on the urgent banking problem at hand, which is within your power to resolve.”
Currently, cannabis-based businesses have issues operating due to their lack of access to legitimate banking operations. Banks are hesitant to service the cannabis industry because of marijuana’s legal status under the Controlled Substances Act. A lack of access to financial institutions creates obstacles for marijuana businesses, which as of now are often forced to operate on a cash basis.
Furthermore, the inability to access formal banking services is likely impeding the industry’s growth since, as businesses are not able to obtain capital loans and financing.
And the issue is not isolated to those formally selling legal cannabis alone. Businesses providing services to cannabis-based businesses are in danger of losing access to financial services themselves since their banks are susceptible to charges of money laundering.
Support for ensuring cannabis-based businesses access to formal banking services has also come from the Independent Community Bank Association (ICBA) which represents smaller banks, the National Association of State Attorneys General, and the National Association of State Treasurers.
These associations likely have a more financial than altruistic motive for their actions, since cannabis businesses utilizing banking services would represent a boon to their respective members.
Held Up in Gridlock
The cannabis industry banking issue has become subject to partisan gridlock. The Financial Services Committee in the Democratic-controlled House of Representatives in March passed a bill allowing banks to serve cannabis-based business. However, its corresponding bill is currently stalled in the Republican-controlled Senate Banking Committee.
The marijuana banking bill has bipartisan support in the House, where it has 184 cosponsors and is expected to pass the full House of Representatives soon. In February, the House held a hearing on the difficulties marijuana businesses face in accessing financial services from banks.
The corresponding Senate bill, the Secure And Fair Enforcement Banking Act of 2019 (S.1200), has five Republicans among its 29 cosponsors, including Cory Gardner (R-CO), whose state has a thriving recreational cannabis industry.
However, Senate Banking Chair Mike Crapo (R-ID) recently said he is not supportive of the committee taking action, claiming that it cannot go through because cannabis is illegal and must be dealt with by the U.S. Department of Justice first.
When the House was in Republican hands, no hearings were held on the issue.
Earlier this year, 38 state and territorial attorneys general called on Congress to pass federal legislation that would allow marijuana businesses to access the federal banking system.