(This story has been updated to include a statement from the American Bankers Association.)
Major issues facing the cannabis industry, such as limited access to banking services, have stalled in Congress without even getting a hearing, much less a floor vote.
That will change Wednesday, when a subcommittee of the now-Democratic-controlled House Financial Services Committee hears testimony on the difficulty legal cannabis businesses have opening and maintaining bank accounts.
The hearing – which also will look at proposed cannabis banking legislation that the banking industry supports – is only the first step in getting a measure passed.
But it’s seen by the cannabis industry as a significant development – although any legislation that passes the House will face a bigger challenge in the Republican-controlled Senate.
The NCIA has been collecting written testimony from its members to submit to the subcommittee.
Industry officials such as Smith say they believe the banking issue may be one of the most promising ones to tackle this congressional session because it has a public safety consequence: Cash-only businesses attract crime.
“It’s a real public-safety hazard,” Smith said. “You still have employees who walk around with large sums of cash to pay utility (and other) bills.”
The initial witness list includes:
- Corey Barnette, owner of District Growers Cultivation Center & Metropolitan Wellness Center in Washington DC.
- Gregory Deckard, a bank executive speaking on behalf of the Independent Community Bankers of America.
- California state Treasurer Fiona Ma.
The hearing will include a discussion of the draft “Secure and Fair Enforcement Banking Act of 2019,” the so-called SAFE Banking Act. Click here for information about the hearing and a link to the webcast.
The draft bill, among other things, would prevent a federal banking regulator from:
- Terminating or limiting the deposit insurance of a federal financial institution solely because it provided services to a legal cannabis business.
- Prohibiting, penalizing or discouraging banks from providing services to legal marijuana businesses.
- Taking adverse action on a loan made to a legal cannabis business.
A major banking group, the American Bankers Association, told the subcommittee in a statement “the SAFE Banking Act would be an important first step toward enabling financial services for cannabis-related businesses.”
The ABA noted that while a small number of banks have decided to take the risk of serving those businesses, “the majority of financial institutions will not take the legal, regulatory or reputational risk associated with banking cannabis-related businesses without congressional action.”
The group, citing the risk of theft and crime related to cash enterprises, said that cannabis businesses would be “safer and better regulated” and communities better protected if state-legal MJ businesses were allowed to use the banking system.
Perlmutter’s office noted in a news release that U.S. Treasury Secretary Steven Mnuchin has supported the idea of allowing MJ businesses to have bank accounts.
Mnuchin, in a speech before the House Financial Services Committee a year ago, said he didn’t want legal marijuana businesses to have to carry around “bags of cash” to pay their employees.
(For additional coverage of this topic, click here.)
Jeff Smith can be reached at [email protected]