Senate Banking Committee Holds Landmark Hearing on Cannabis Banking Legislation
Senators Merkley, Crapo, and Maps Credit Union’s Rachel Pross shared perspective on hurdles financial institutions, canna businesses, and their employees face without federal legislation.
Federal legislation removing barriers for financial institutions to serve the legal cannabis industry has been proposed for several years, but significant movement has occurred only this year. Tuesday, the Senate Banking Committee held a hearing to consider the challenges legal marijuana businesses have in obtaining financial services. Despite the fact some form of cannabis is legal in 33 states, the District of Columbia, and various U.S. territories, federal law presents a myriad of complex compliance hurdles for financial institutions, and just a handful have decided to navigate the regulatory maze.
Senators Jeff Merkley (D-OR) and Cory Gardner (R-CO) led the expert witness panel. They have introduced the Safe and Secure Enforcement (SAFE) Banking Act. Similar legislation is pending in the House, where a committee also held a hearing this year.
Testimony documented the public safety issue that canna businesses encounter, because without access to banking services, they are working in a high-cash environment.
Quotables from Tuesday’s testimony:
“In my home state, state and local governments took in over $80 million in fiscal year 2018 in taxes. That’s $80 million traveling down the roads and highways in duffle bags and backpacks. I’ve heard from dozens of people who are operating perfectly legal businesses who have been forced to deal entirely in cash or risk having business and personal bank accounts or lines of credit cut off.” –Sen. Jeff Merkley (D-OR)
“Without a federal law providing explicit legal clearance for financial institutions to provide banking services to cannabis businesses, it’s quite likely that many of those businesses will be forced to operate in the underground economy and many mainstream businesses would end up with no access to the financial services sector. That increases the potential of lost tax revenue and crime. It also deprives law enforcement of vital information.” –Rachel Pross, Chief Risk Officer, Maps Credit Union, Salem, Oregon
“Having a conversation about whether banks should be able to provide banking services to entities engaged in federally illegal behavior brings up the issue and concern that there has been a push to choke off legal industries from the banking sector. I have said this many times and I will say it again, Operation Choke Point was deeply concerning because law-abiding businesses were targeted strictly for operating in an industry that some in the government disfavored. Under fear of retribution, many banks have stopped providing financial services to members of these lawful industries for no reason other than political pressure, which takes the guise of regulatory and enforcement scrutiny. Operation Choke Point was inappropriate, and Congress needs to pass legislation to prevent future Operation Choke Point Initiatives.” –Sen. Mike Crapo (R-ID), Chair, Senate Banking Committee
Following the hearing, Sen. Crapo told media that “there is a strong case to be made that we need to deal with the banking side of this issue,” according to a post in Politico. The Senator said he could not provide a timeline for a solution.