The attorneys general across the nation are joining forces to urge Congress to do its job and pass legislation that would allow cannabis companies to access banks and other financial institutions. A bill introduced by Colorado Rep. Ed Perlmutter would do just that.
Passing banking legislation “would bring billions of dollars into the banking sector, and give law enforcement the ability to monitor these transactions,” the letter from the attorneys general said. “Moreover, compliance with tax requirements would be simpler and easier to enforce with a better-defined tracking of funds. This would, in turn, result in higher tax revenue.”
It is essential that Congress take actions to allow legal cannabis businesses access to banking services, Colorado Attorney General Cynthia Coffman said in a statement. “Opening a bank account is often one of the first steps a new business takes, but given the currently outdated federal banking laws, the multi-billion dollar legal marijuana industry is forced to remain in the financial shadows running cash-only businesses,” she said. “I urge Congress to take the necessary action to bring that commerce into the banking system, which will address certain public safety concerns, and allow law enforcement, regulators and taxing authorities to better monitor these businesses.”
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The letter, signed by 19 state attorneys general says:
We are a bipartisan group of state attorneys general who recognize that the states and federal government share a strong interest in protecting public safety and bringing grey market activities into the regulated banking sector. To address these goals, we urge Congress to advance legislation that would allow states that have legalized medical or recreational use of marijuana to bring that commerce into the banking system.
Twenty-nine states and several U.S. territories have legalized the medical use of marijuana. Among those, eight states and the District of Columbia, also allow recreational use by adults over 21 years of age. However, because the federal government classifies marijuana as an illegal substance, banks providing services to state-licensed cannabis businesses could find themselves subject to criminal and civil liability under the Controlled Substances Act and certain federal banking statutes. This risk has significantly inhibited the willingness of financial institutions to provide services to these businesses.
Despite the contradictions between federal and state law, the marijuana industry continues to grow rapidly. Industry analysts report that sales grew by 30% to $6.7 billion in 2016 and expect those totals to exceed $20 billion by 2021. Yet those revenues often exist outside of the regulated banking space. Businesses are forced to operate on a cash basis. The grey market makes it more difficult to track revenues for taxation purposes, contributes to a public safety threat as cash intensive businesses are often targets for criminal activity, and prevents proper tracking of large swaths of finances across the nation.
To address these challenges, we are requesting legislation that would provide a safe harbor for depository institutions that provide a financial product or service to a covered business in a state that has implemented laws and regulations that ensure accountability in the marijuana industry such as the SAFE Banking Act (S. 1152 and H.R. 2215) or similar legislation.