On Friday, banking associations from 49 states, including Puerto Rico, sent a letter to the chairman and the highest ranking member of the Senate Banking Committee requesting them to approve the legislation seeking to protect credit unions and banks providing services to state-legal marijuana businesses.
The letter, which was addressed to Senators Mike Crapo (R-ID) and Sherrod Brown (D-OH), stressed that they are not supporting marijuana legalization, but that they are in support of legislation passed by the House. The bill would prevent federal regulators from punishing banks that are working with legal marijuana companies.
Last year, the House approved the Secure and Fair Enforcement (SAFE) Banking Act through a bipartisan vote.
Although more and more states are seeking to legalize marijuana in one form or another, the current federal regulations prohibit banks and credit unions from doing business with marijuana companies for fear of federal sanctions.
The Associations further wrote that marijuana businesses are forced to operate on a cash basis, which compromises public safety, revenue administration, and legal compliance concerning the communities they serve. This could severely impact our local economies because revenue, which is paid to unrelated industries such as law firms, accountants, and contractors, is money, which is derived from illicit activities, and it could be construed as money laundering.
The associations representing every state except Kentucky further stated that there is an ongoing confusion over the existing policy conflicts in the industry about whether businesses that do not directly handle marijuana but supply marijuana companies with products and services that can be serviced by financial institutions.
They further wrote that if the federal laws are not amended, the entire sector of economic activity in legal marijuana might be banished from the banking system. The SAFE Banking Act respects state powers, and it does not facilitate marijuana sales in states that have opted for prohibition.
The letter concludes by beseeching Sens. Crapo and Brown to evaluate and address the issue of banking problems, as it is within their power. And by so doing, states would benefit from immediate public safety, tax administration, and proper regulations.
Some legislators opposed the measure claiming that it would impact the legal status of marijuana as a controlled substance. Seeing this, Sen. Crapo suggested a series of restrictive amendments to the legislation, such as limiting banking access to marijuana businesses selling products containing less than 2% of THC. Advocates and industry stakeholders rejected the proposed changes.
Senator Cory Gardner said that behind closed doors, lawmakers are compromising on some of the issues and are also working through some of the objectives relating to safety, research, and guidance.
On Wednesday, the head of the Treasury Department said that the banking issue could not be handled through administrative action; therefore, it should only be dealt with legislatively.
The appeal made by the banking associations across the nation is seen as magnifying the pleas of cannabis companies like Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP) to have enabling banking laws so that state-legal marijuana businesses can access the same services as other businesses in their jurisdictions.
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