House Financial Services Subcommittee considers legislation that would make it easier for cannabis businesses to access banking services if they are in compliance with state law
WASHINGTON, D.C. – Members of the House Financial Services Subcommittee on Financial Institutions and Consumer Protection heard testimony Wednesday from representatives of the financial sector, the cannabis industry, law enforcement, and the treasurer of California in support of legislation that would make it easier for banks to work with legal cannabis businesses without fear of federal prosecution. The committee discussed a draft of the Secure and Fair Enforcement (SAFE) Banking Act, which is expected to be introduced in the House of Representatives this month by Rep. Ed Perlmutter (D-CO) and Rep. Denny Heck (D-WA). The bill would address the public safety and transparency issues that are created by current banking restrictions which discourage most financial institutions from being able to have cannabis businesses as clients.
“Congress has an opportunity to make a simple policy change that will greatly benefit communities and small businesses by approving cannabis banking reform,” said Aaron Smith, executive director of the National Cannabis Industry Association (NCIA). “Representatives Perlmutter and Heck should be commended for pushing for this hearing so that this issue can get the attention it deserves and we can move toward a sensible policy that will increase public safety and transparency in this burgeoning industry.”
Under current restrictions, most financial institutions are unwilling to work with cannabis businesses due to the threat of federal prosecution. While cannabis is legal in some form in 47 states, it is still illegal under federal law, and banks that work with them could be charged with crimes including money laundering.
Dealing solely in cash also creates difficulties for state regulators and tax collectors, from logistical problems to limited transparency. Most crucially, while research shows that cannabis businesses are associated with decreases in crime where they are located, the fact that they are mostly forced to operate on a cash-only basis makes them attractive targets for crime themselves, putting employees, customers, and the general public at risk.
“We have the power in this committee to prevent murders and robberies, here today,” said Rep. Perlmutter during the hearing.
Rep. Perlmutter and Rep. Heck are expected to introduce an updated version of a bill that they introduced last year, the SAFE Banking Act, that would resolve this issue by protecting banks and creating a safe harbor for them to work with regulated cannabis businesses. At the end of the last congressional session, the bill had garnered nearly 100 cosponsors.
NCIA submitted written testimony for this hearing, along with dozens of testimonials from cannabis business owners and employees about their experiences with the currently problematic financial services environment.