Senate hearing represents a step forward in providing bank access to marijuana

An important Senate committee met on Tuesday to discuss legislative solutions to allow banks to serve legal marijuana businesses without the risk of being sanctioned by federal financial regulators. The panel chair concluded that "a case has been forcefully presented here" that the problem needs to be solved but that it is "a very important and complex problem on which we must act properly. "

The Senate Committee on Banking, Housing and Urban Affairs, chaired by Senator Mike Crapo (R-ID), announced last week's hearing, which surprised some lawyers given the senator's earlier statement that which he would not undertake to examine the financial situation of cannabis. problems of services while the federal government still considered marijuana as a controlled substance.

A bipartisan bill – the Secure and Fair Banks Act – was the focus of debate. The House version of the bill approved the Financial Services Committee of this House in March and, although the defenders hoped that it would go to the whole House before the parliamentary recess, expectations shifted to autumn.

After the hearing, a Marijuana Moment reporter asked Crapo if he had talked about the bill with Senate Majority Leader Mitch McConnell (R-KY), and the President responded that he had " talked to almost all of our colleagues about it. "

Responding to questions from other reporters on the next steps, he said the committee "is currently trying to see if we can find a way to solve the various problems", in anticipation of a possible room for maneuver on the legislation relating to cannabis banks, and that he would not do it. "the intention to hold additional hearings on the issue."

Senator Sherrod Brown (D-OH), a prominent member of the panel, said in her opening remarks at the hearing that "the legal cannabis industry is one of the most dynamic growing in the United States and employs hundreds of thousands of people.

"No matter what you think about marijuana itself, we have a duty to look for the workers who work in this industry and the communities they represent," he said.

Among the witnesses who testified before the Senate committee included the Sens promoters. Cory Gardner (R-CO) and Jeff Merkley (D-OR), Rachel Pross, representative of the Credit Union National Association (CUNA), and Joanne Sherwood, representative of the National Association of Credit Unions (CUNA),, Smart Approaches To Marijuana (SAM), Garth Van Meter, Vice President, Government Affairs, and John Lord, Executive Director of LivWell Enlightened Health.

Watch the marijuana bank hearing in the Senate below:

Lawyers argue that providing bank access to cannabis companies would increase financial transparency and mitigate security risks, as these companies are currently largely forced to operate on the treasury method, which in turn makes crime targets.

Gardner testified that "states play a leading role in this area and that the federal government has not responded. He closed his eyes, clogged his ears and claimed that the problem was going away. This will not be the case. "

"Keeping those dollars out of the banks means we're losing the ability to find where he's going," he added. "It is also difficult to ensure that all taxes are paid. This allows criminals in the illicit market to pretend to be legitimate. And that leaves hundreds of millions of dollars in cash in that state. "

He acknowledged during the hearing that it was "a difficult hearing, a difficult topic." I know it."

"But we have been sent here to deal with difficult issues," he said. "It's a big step forward. The first hearing we had on this issue when the federal government realized that the problem of cannabis will not disappear and we must act. "

At the end of the hearing, Mr. Gardner told reporters that he was confident that the Senate would have enough support to adopt not only the SAFE Bank Act, but also another project. bipartisan law that it would co-sponsor to allow states to define their own cannabis policy without interference from the federal government.

"[I]It would happen with majority support and I think a majority of Republicans would also vote for it, "he said.

In particular, the senator told Marijuana Moment that he was "constantly" talking to McConnell about cannabis issues no later than Monday.

"If they want me to shut up, they can just pbad this law, as well as the STATES law," he said, referring to the draft laws on banks and the broader rights of the states. .

But GOP's participation in the meeting was largely inadequate, with only Crapo and Gardner among the majority, asking questions about the extent to which Senate Republicans are interested in pushing forward legislation on cannabis banks.

Merkley testified that "the lack of availability of financial services for cannabis-related businesses in the states where it is legalized created a scenario in which businesses are forced to operate in cash, creating a dangerous environment for all parties concerned ".

"Financial institutions are in favor of legal clarity and certainty and a legislative hearing would be an opportunity to address the outstanding issues and ensure a better understanding of the proposed bipartite legislation", he said, adding that he hoped the hearing "would give members the opportunity to hear directly from witnesses who have first-hand experience of the challenges facing the financial sector," he said. Cannabis industry and law enforcement. "

During the hearing, Merkley said that there was "nothing good to force the world to operate with money."

"It's an invitation to money laundering. It's an invitation to organized crime. It's an invitation to theft. It's an invitation to cheat on your taxes or on your employees, "he said. "Let's repair that. Let us respect the states' vision of the rights of all states that said it makes sense here at home for our citizens. "

"Although the SAFE Bank Act does not solve all the banking problems related to cannabis, it would help the 33 states that have legalized cannabis in one form or another to make their communities safer, collect their taxes and regulate their cannabis markets, "said Sherwood. , who is President and CEO of Citywide Banks, said in a written testimony on behalf of ABA. "It would also help banks and their customers in states without cannabis legal regime by tackling the unintended consequences for independent companies that provide products and services to the cannabis industry, to their employees." or their service providers, without compromising each state's ability to prohibit the sale and use of cannabis. within their borders. "

Pross, Risk Officer at Maps Credit Union, said his badociation "has no position on the federal legalization of cannabis," but that "many credit unions operate in states and communities that have legalized their consumption or growth. CUNA strongly believes that "financial institutions should be allowed to legally serve companies that engage in activities permitted by the laws of their state, even if that activity is inconsistent with federal law."

"On behalf of US credit unions and their 115 million members, we urge Congress and the Administration to work to make this legislation a law and give financial institutions the certainty they need to better serve our communities."

The SAM group of prohibitionists, Van Meter, stated that committee members were tasked with determining "whether we want to promote and increase drug use during a drug-related crisis or discourage drug use and help people to reduce their drug use." to recover and heal itself "wondering if it was necessary to give access to banking services. to cannabis companies.

"By moving to the technicality of banking rules, the marijuana industry hopes to take advantage of the benefits of federal legalization without debate on the effects on public health," he said.

SAM's letter contains a letter expressing concern about the potential consequences of the adoption of the SAFE Bank Act, signed by the former officials of the Drug Enforcement Directorate and the Office of National Control Policy. drug addicts.

Senator Brian Schatz (D-HI) spoke about barriers to marijuana research, noting that he had co-sponsored bipartite legislation tabled last week that would address the issue alongside Sens. Chuck Grbadley (R-IA) and Dianne Feinstein (D-CA).

Van Meter intervened to say that "if the marijuana industry was concerned about research, then I did not think it would sell some of these extremely potent products."

"Well, hang in there, I'm concerned about the research," said Schatz. "I will allow you to answer the questions, but I will not let you try the pot against the people you are testifying with."

Lord, chairman of the Cannabis Trade Federation, said that "because of the significant compliance costs badociated with serving cannabis customers in accordance with existing policies, financial institutions charge companies a substantial monthly fee. cannabis producers ".

"Our company pays more than $ 3,000 a month for the simple privilege of having an account," he said of LivWell Enlightened Health. "The current situation is particularly difficult for small businesses. Because of our size, we are able to absorb the additional costs of cash management and exorbitant bank fees, but many small businesses are not. "

"In addition, solving the banking problem could significantly help cannabis companies obtain business loans. This is essential for small business owners who may not have access to other sources of capital. It should be noted that Section 280E of the Internal Revenue Code, which prohibits all cannabis-producing companies from deducting their standard business expenses when calculating their taxes, also reduces these small businesses. If there is hope to help small businesses – including minority-owned businesses and women – to survive and thrive, we need to correct the banking situation and amend section 280E so that the companies producing cannabis are taxed like any other company. "

Senator Bob Menendez (D-NJ) discussed the difficulties faced by cannabis companies in obtaining loans and introduced separate legislation that he introduced on Monday, which would give these companies access to insurance.

Federal law prevents legal marijuana business owners from obtaining comprehensive and affordable insurance coverage.

Without this, they can not protect their property, employees or customers.

– Senator Bob Menendez (@SenatorMenendez) July 23, 2019

These small businesses must also be able to open a bank account, pay employees, take out credit cards and write checks.

The SAFE Banking Act is a game changer. It gives cannabis companies access to basic banking services, making the sector safer and making the future brighter. pic.twitter.com/wsgVwyu1YR

– Senator Bob Menendez (@SenatorMenendez) July 23, 2019

Senator Tina Smith (D-MN) argued that federal marijuana reform should not be limited to access to banks.

"I think we have to understand that when we are considering criminal sanctions for involvement of a company in the marijuana sector, we can not forget the thousands of people who have spent time in jail for their involvement in marijuana, "she said. "Communities of color, especially African-American men, have paid a disproportionate price for generations of aggressive enforcement of marijuana laws."

Brown, the Democrat at the top, argued the same point, saying that the audience on financial services was "only one element of the conversation that Congress had to have on the policy on marijuana ".

"People should not be thrown in jail or jeopardize their future with a criminal record for nonviolent marijuana offenses," he said.

Other topics discussed during the meeting include the lack of access to financial services for hemp businesses since the crop was legalized by the federal government under the 2018 Farm Act, Barriers to Research on marijuana and how banking access to the sector can help regulators better identify illicit financial activities. .

Banking badociations representing the 50 states have expressed support for the SAFE law. Other advocates for a legislative resolution on the banking sector include a coalition of 20 bipartisan governors, the National Association of Treasurers, financial regulators in 25 states and a majority of attorneys general.

On the House side, there are 206 Cosponsors on the bill. The bill has 31 cosponsors in the Senate.

Bank Hearing Marks Sixth Congressional Marijuana Policy Hearing, Including Historic House Subcommittee Meeting on Justice Crime, Terrorism and Homeland Security on Pathways to Put in Place end the federal prohibition of cannabis. Another committee is scheduled to discuss hemp production on Wednesday.

Senate to hold second cannabis hearing next week