Lawmakers Renew Call for Easier Banking for Legal Cannabis Companies
(Bloomberg) -- Lawmakers pressed the case for legislation to ease access to banking services for legal cannabis businesses, renewing a campaign that failed to secure passage during the last session of Congress.
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Advocates argued before the Senate Banking Committee on Thursday that granting legal protections from federal drug laws to banks that serve cannabis dispensaries and related businesses allowed under state laws would cut down on crime and tax evasion.
“Forcing legal businesses to operate in a cash economy is terrible for accountability, but it’s great for crime,” said Senator Jeff Merkley, an Oregon Democrat who sponsored the SAFE Banking Act. “It has left these businesses and all that are connected to them open to violent crime, open to money laundering, employee theft, tax fraud and more.”
The measure, reintroduced in April by Merkley and Republican co-sponsor Steve Daines of Montana, faces uncertain prospects. The measure didn’t pass the Senate in the prior Congress.
In the House, Finance Services chairman Patrick McHenry, whose panel has jurisdiction, told Bloomberg TV in March that Congress should focus on studying federal legalization rather than cannabis banking.
Marijuana is illegal under federal law. But 21 states and the District of Columbia have legalized cannabis for adult use, according to the Marijuana Policy Project, and 37 states and the District have legalized medical cannabis.
That creates a gray area on how to handle cannabis transactions in states where it is legal and raises concerns for larger financial institutions.
As a result, cannabis businesses typically use state-chartered banks and credit unions, or they operate in cash, which proponents argued has led to crime the industry faces.
The SAFE Banking Act would prohibit penalizing banks for providing financial services to cannabis businesses legal under state law. It would also create a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees.
Kevin Sabet, president of Smart Approaches to Marijuana, a non-profit organization that opposes commercial legalization, raised concerns about the potency of commercially marketed marijuana products and the risk that lowering federal penalties would encourage more advertisement and use.
“Today’s marijuana is more dangerous than ever and this bill would open the marijuana industry to Wall Street hedge fund managers and Silicon Valley investors who would create even more hazardous products to get them in the hands of even more Americans,” Sabet said.
Senate Majority Leader Chuck Schumer has expressed support for the legislation and said it is a priority that criminal justice provisions, such as expunging criminal records for certain low-level marijuana offenses, be added.
Merkley and Daines led negotiations on adding related provisions to the bill during the last session of Congress, but those talks failed.
Merkley and Daines said in a statement last month there would be a chance before a final Senate vote to attach provisions, such as a measure to support state governments in expunging some marijuana-related criminal records and another to end restrictions on gun sales to marijuana users.
If all senators who caucus with Democrats support the measure, it would need the support of at least 9 Republicans to overcome a potential filibuster. Only 7 Republicans have signed onto the bill as co-sponsors, including Daines.
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