On February 13, 2019, the Consumer Protection and Financial Institutions Subcommittee of the House Financial Services Committee conducted its first hearing focused on access to banking services for cannabis-related businesses that are legal under state law. The witnesses testifying before the Subcommittee were:
- The Honorable Fiona Ma, California State Treasurer
- Maj. Neill Franklin (Ret.), Baltimore City & Maryland State Police Departments, and Executive Director, Law Enforcement Action Partnership (LEAP)
- Ms. Rachel Pross, Chief Risk Officer, Maps Credit Union, on behalf of Credit Union National Association (CUNA)
- Mr. Gregory S. Deckard, President, CEO and Chairman, State Bank Northwest, on behalf of Independent Community Bankers of America (ICBA)
- Mr. Corey Barnette, Owner, District Growers Cultivation Center & Metropolitan Wellness Center
- Mr. Jonathan H. Talcott, Chairman, Smart Approaches to Marijuana (SAM)
Prior to the hearing, Congressmen Ed Perlmutter (D-CO), Denny Heck (D-WA), Steve Stivers (R-OH), and Warren Davidson (R-OH) circulated a draft of “The Secure and Fair Enforcement Banking Act of 2019” or the “SAFE Banking Act of 2019”. The draft bill would prevent federal banking regulators from terminating or limiting a bank’s FDIC deposit insurance or otherwise penalizing banks for providing financial services to state approved cannabis-related businesses. In addition, the draft bill includes a provision which excludes legitimate cannabis-related businesses’ funds from the definition of “proceeds from an unlawful activity” for purposes of federal criminal law. Finally, the bill would require the Federal Financial Institutions Examination Council to issue guidelines for banking institutions with regard to providing financial services to state regulated cannabis-related businesses and filing suspicious activity reports with the Financial Crimes Enforcement Network (FinCEN).
The hearing primarily focused on current barriers to cannabis-related businesses opening and maintaining bank accounts, and the public safety threats and lack of transparency inherent in businesses operating on an exclusively cash basis. The Representatives and witnesses highlighted examples of cannabis-related businesses becoming the targets of crime, employees of cannabis-related businesses being forced to travel with large sums of cash from their wages or to pay their taxes, and financial institutions dealing with the uncertainty of accepting funds from cannabis-related businesses. Representatives also expressed concerns that the benefits from providing banking access to cannabis-related businesses would flow to individuals and communities disproportionately impacted by the drug war, and that any legislation providing access to financial institutions for cannabis-related businesses that are legal under state law was premature given that cannabis remains illegal under federal law.
At this point there is no vote scheduled on the SAFE Banking Act of 2019 and it appears that the debate will continue. Bressler, Amery & Ross, P.C. will continue to monitor the legislative developments and advise clients as needs arise.