A bipartisan group of Senators sent a letter to the head of the Financial Crimes Enforcement Network (FinCEN), encouraging federal regulators to take action to give state-legal cannabis businesses access to banking services.
Banking has long been a thorn in the side of cannabis business owners. Because cannabis remains a federally illegal Schedule I drug, most national banks won’t allow state-licensed cannabis businesses to open account. Some smaller state-chartered banks and credit unions are quietly banking cannabis businesses, but the oversight and reporting required by FinCEN make it nearly cost-prohibitive.
As a result, cannabis businesses are forced to deal almost entirely in cash. That leaves businesses vulnerable to thefts and break-ins. This isn’t just a serious concern for the businesses and their employees. It also poses a serious danger to customers and jeopardizes the safety of the community.
The lawmakers were led by Oregon Senator Jeff Merkley. His letter included signatures from a number of prominent politicians from both sides of the aisle. Sen. Elizabeth Warren, who had her hand forced on the issue by the recent legalization in Massachusetts, signed on to the letter. So did two other lawmakers from recently legalized states, Sen. Angus Kaine (D-ME), and Sen. Lisa Murkowski (R-AK).
The letter was prompted by the recent general election, during which eight states legalized cannabis for medicinal or adult use. More than half of the states have legalized cannabis for medicinal use, including eight states (along with the District of Columbia) that legalized for adult use.
The letter makes a compelling argument for the federal institution to allow banking services to be available to state legal cannabis businesses, not just for safety, but for the benefit of the federal government:
“Forcing all these direct and indirect businesses to operate in cash not only creates a huge target for criminals, but also complicates the collection of state and federal taxes. The fledgling legal market for marijuana is around $7 billion, a figure that’s dwarfed by the overall billion US market, most of which remains illegal. This business environment is an invitation to tax fraud, robberies, money laundering, and organized crime.”
The letter ends with an urgent call for FinCEN to issue clear guidance on the complex situation. The letter was signed by 10 Senators, including Al Franken (D-MN), Cory Booker (D-NJ), Patty Murray (D-WA), Ron Wyden (D-OR), Kirsten Gillibrand (D-NY), and Bernie Sanders (D-VT).
This isn’t the first time lawmakers have called for action on the banking issue. In 2014, Sen. Dianne Feinstein (D-CA) and Sen. Chuck Grassley (R-IA) joined forces to call on FinCEN to issue clear guidance.
FinCEN has only ever made one statement on marijuana-related businesses, immediately after the legal market began operating in Colorado. That guidance included advice that placed a great deal of risk on financial institutions, leaving them open to civil and/or criminal liability. Feinstein’s letter characterized the guidance as “dangerously misleading.”
The Financial Crimes Enforcement Network has yet to release any financial guidance on cannabis-related businesses since February of 2014.