Last week, an Illinois lawmaker filed a bill that would increase access to banking services for marijuana businesses. The number of financial institutions accepting to transact with marijuana-related businesses is increasing; however, the majority are still wary of doing business with cannabis businesses while cannabis remains federally illegal.
Now new legislation that would create a licensing process for banks and credit unions has been introduced by Democratic Representative Kambium Buckner. The bill would allow financial institutions to accept and issue special purpose checks for cannabis businesses.
The new legislation coincides perfectly with the comprehensive marijuana legalization bill, signed by the Illinois governor, which is set to take effect on January 1, 2020.
Although the legislation would have no effect on federal marijuana policy, it would help mitigate the risks that are faced by marijuana businesses operating on a cash-only basis by allowing licensed financial institutions to accept alternative methods of payments.
The new legislation assigns the responsibility of issuing the licenses to the Cannabis Banking and Credit Union Advisory Board.
The provisions of the bill include providing a safe and fast way to pay state and local fees and taxes, facilitating the payment of rent associated with marijuana business account holders as well as issuance of special purpose checks. The board would also have to invest in the state’s economy legally and reduce the burden of collecting and managing large sums of money from the local government.
Individuals or entities that have received limited marijuana charters or credit unions are expected to follow the Federal Bank Secrecy Act. They are also required to comply with the reporting guidelines for the Financial Crimes Enforcement Network.
The special purpose checks issued by the financial institutions can only be issued for the specific tasks as stipulated in the legislation. For example, paying off local and state taxes, rent, and issuing of bonds or warranties would only be allowed through these checks.
Marijuana limited charter banks and credit unions can form a network by entering into a contract. But, this would not prevent them from providing financial services to other businesses other than cannabis businesses.
The introduction of the new legislation finds Congress deep in the bipartisan legislation debates, which are meant to protect banks from being penalized by the federal regulators for transacting with marijuana businesses across the legal states. The SAFE Banking Act, which was approved by the House in September, is expected to secure Senate Banking Committee approval before the end of 2019.
In an interview with an online industry publication last week, the panel chairman, Senator Mike Crapo said that he is in support of holding a committee vote in the near future. But, he is suspicious of the House impeachment proceedings that could delay the marijuana banking vote.
Experts are of the view that cannabis businesses like ChineseInvestors.com (OTCQB: CIIX) and Organigram Holdings Inc. (TSX: OGI) (NASDAQ: OGI) may be hoping that this Illinois bill is enacted so that cannabis businesses can access some banking services.
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