Last Wednesday, the 116th Congress held their first cannabis-related hearing before the Consumer Protection and Financial Institutions Subcommittee. Addressing the current banking and regulatory obstacles faced by cannabis enterprises, the hearing was also tasked with handling the threat of the inadequate industry support.
Supervised by the committee’s chairman, Rep. Gregory Meeks (D-NY), Meeks opened the session stating the need for a permanent regulatory framework for cannabis businesses. “The absence of a broader, permanent regulatory framework continues to keep nearly all banks out of this growing industry despite a clear interest,” the representative explained. “Today’s hearing will allow us to begin consideration of draft legislation to bring transparency, accountability and address a major driver of violent crime in this space.”1
While many versions of a similar cannabis legislation have been unsuccessful in gaining sufficient traction previously, the draft of a new bipartisan bill, the Secure and Fair Enforcement Banking Act of 2019 (or “SAFE” Banking Act), was announced just days before the congressional hearing.2 Written by Reps. Ed Perlmutter (D-CO), Steve Stivers (R-OH), Denny Heck (D-WA), and Warren Davidson (R-OH), the proposed legislation would allow cannabis businesses to use banks and other financial institutions in states where the businesses are already legitimate. With the removal of federal banking regulations, the bill would prohibit the penalization or discouragement of banks serving legal cannabis businesses.
Among some of the hearing’s attendants were Law Enforcement Action Partnership (“LEAP”) Executive Director Major Neill Franklin, D.C.-based medical marijuana dispensary owner Corey Barnette, California State Treasurer Fiona Ma, the chair of the anti-legalization group Smart Approaches to Marijuana (“SAM”), as well as banking representatives.
One of the primary matters of the hearing centered on the security safe banking could provide to cannabis-related establishments. Without access to traditional financial institutions, most transactions have had to operate on a strictly cash-basis, leaving businesses and employees vulnerable to targeted crime. “We have the power in this committee to prevent murders and armed robberies,” Rep. Heck said, providing examples of related violate crimes, some in his home state of Washington. “We must use it, and we must use it now because we are already late.”3
Joining with Rep. Heck was the executive director of LEAP, Major Neill Franklin. Franklin maintained that the current status of cannabis banking rules: “encourage tax fraud, add expensive monitoring and bookkeeping expenses and—most importantly—leave legitimate businesses vulnerable to theft, robbery and the violence that accompany those crimes.”4
Several other witnesses voiced their support of a response by the federal government to address proper banking options for cannabis businesses. California State Treasurer Fiona Ma noted in written testimony, “Any business that handles significant amounts of currency is also subject to greater scrutiny by the financial services industry for all of the reasons that are well understood by members of this committee.”5 She went on to highlight the accountability of banks, claiming it was impermissible for banks to disregard the responsibility of knowing their customers and taking measures to prevent money laundering. Rep. Dina Titus (D-NV) stated simply that the substance’s prohibition was finished and that the federal government needed to respond accordingly.
Broader opposition to cannabis’s legalization was still present at the hearing, however. Rep. Roger Williams (R-TX) questioned Jonathon Talcott, board chair of Smart Approaches to Marijuana, whether it was “a universally accepted fact” that cannabis did not harm overall public health or lead to substance abuse. Talcott responded that the substance “is very clearly a gateway drug,” and proceeded to insist on cases of “marijuana-induced psychosis.”6 The SAM board chair later went on to testify, “You really need to address the Controlled Substances Act and its prohibition on marijuana…before any of the proposed changes and safe harbors would be effective.”7
Another dissenting opinion came from Rep. Blaine Luetkemeyer (R-MO), who pointed to the potential confusion of addressing a federally illegal substance, “Today we are discussing the merits of allowing federally illegal businesses to access banking services. As far as I know, the House Financial Services Committee does not have jurisdiction over descheduling a drug.”8
Colorado Rep. Ed Perlmutter did state during the session, “If someone wants to oppose the legalization of marijuana, that’s their business.” He added, “But the American voters have spoken, and continue to speak, and the fact is you can’t put the genie back in the bottle. Prohibition is over.”9
Immediate next steps are not yet available for the congressional committee or the proposed SAFE Banking Act. Following the announcement of the congressional hearing, MarketWatch reported an increase in cannabis shares.10 Within the committee, Reps. Heck and Perlmutter are hopeful for the proposal of a companion bill to their draft within the Senate. A formal introduction of their drafted bill is expected in 2-3 weeks.11
Banking access is just one cannabis issue that Democrats are reviewing for the potential of reform legislation in 2019. According to Rep. Earl Blumenauer (D-OR)’s proposed blueprint for cannabis legalization, other topics for review include equal taxing for cannabis businesses, removal of hurdles against scientific research, and better medical access for veterans.12 Blumenauer’s plan ultimately schedules federal legislation approving cannabis for the end of 2019.
Both co-sponsors Reps. Perlmutter and Heck voiced their satisfaction after the conclusion of the hearing but focused on the work ahead. Perlmutter asserted, “The American voters have spoken and continue to speak, and the fact is you can’t put the genie back in the bottle. The SAFE Banking Act is focused solely on taking cash off the streets and making our communities safer, and only Congress can take these steps to provide this certainty for businesses and financial institutions across the country.”13
“We listened to hours of testimony today about the dangerous position we put store owners and employees in by forcing them to do all of their business in cash. We can fix this. We don’t have to force them to operate in a way that makes it difficult to secure and track their funds,” Heck confirmed.14
For the full webcast of the hearing, please click here to be redirected to the U.S. House Committee on Financial Services’ website.
Support banking access for cannabis businesses? Contact your representative to let them hear your opinion (Washington, D.C. offices’ numbers supplied below).
- Colorado Rep. Ed Perlmutter (D), (202) 225-2645 · @RepPerlmutter · Website
- Missouri Rep. Blaine Luetkemeyer (R), (202) 225-2956 · @RepBlaine · Website
- Nevada Rep. Dina Titus (D), (202) 225-5965 · @repdinatitus · Website
- New York Rep. Gregory Meeks (D), (202) 225-3461 · @RepGregoryMeeks · Website
- Ohio Rep. Steve Stivers (R), (202) 225-2015 · @RepSteveStivers · Website
- Ohio Rep. Warren Davidson (R), (202) 225-6205 · @WarrenDavidson · Website
- Oregon Rep. Earl Blumenauer (D), (202) 225-4811 · @repblumenauer · Website
- Texas Rep. Roger Williams (R), (202) 225-9896 · @RepRWilliams · Website
- Washington Rep. Denny Heck (D), (202) 225-9740 · @RepDennyHeck · Website
Representative not listed or unsure who to contact? Follow the link here to the U.S. House of Representatives directory.
- Jaeger, Kyle. “Key Moments From The First Marijuana Hearing Of The New Congress.” Marijuana Moment. February 14, 2019. Accessed February 15, 2019. https://www.marijuanamoment.net/key-moments-from-the-first-marijuana-hearing-of-the-new-congress/.
- Merle, Renae. “Banks Want a Hit of the Marijuana Business. Will They Get to Partake?” The Washington Post. February 13, 2019. Accessed February 15, 2019. https://www.washingtonpost.com/business/2019/02/13/banks-want-hit-marijuana-business-will-they-get-partake/?noredirect=on&utm_term=.adb7aa607b28.
- Jaeger, Kyle. “Key Moments From The First Marijuana Hearing Of The New Congress.”
- Linnane, Ciara. “Cannabis Stocks Mostly Lower Ahead of Canopy Growth Earnings.” MarketWatch. February 15, 2019. Accessed February 15, 2019. https://www.marketwatch.com/story/cannabis-stocks-mostly-lower-ahead-of-canopy-growth-earnings-2019-02-14.
- Merle, Renae. “Banks Want a Hit of the Marijuana Business. Will They Get to Partake?”
- Borden, Jeremy. “Congressional Hearing on Banking Access Erupts into Broader Legalization Debate.” Cannabis Wire. February 14, 2019. Accessed February 15, 2019. https://cannabiswire.com/2019/02/14/congressional-hearing-on-banking-access-erupts-into-broader-legalization-debate/.
- Linnane, Ciara. “Cannabis Stocks Climb Ahead of Congressional Hearing on Bank Access.” MarketWatch. February 14, 2019. Accessed February 15, 2019. https://www.marketwatch.com/story/cannabis-stocks-climb-ahead-of-congressional-hearing-on-banking-2019-02-13.
- Kohler, Judith. “Marijuana Banking Proposal Gets First-ever Hearing in U.S. House Committee.” The Denver Post. February 14, 2019. Accessed February 15, 2019. https://www.denverpost.com/2019/02/13/marijuana-banking-proposal-house-perlmutter-gardner/.
- McPherson, Lindsey. “Blumenauer Sends Blunt Marijuana Blueprint to Democratic Leadership.” Roll Call. October 17, 2018. Accessed February 15, 2019. https://www.rollcall.com/news/politics/blumenauer-provides-democratic-leadership-with-blueprint-for-legalizing-marijuana.
- Congressman Ed Perlmutter. “First Congressional Hearing Held on Cannabis Banking.” News release, February 13, 2019. Congressman Ed Perlmutter Serving the 7th District of Colorado. Accessed February 15, 2019. https://perlmutter.house.gov/news/documentsingle.aspx?DocumentID=2378.
- Jaeger, Kyle. “Key Moments From The First Marijuana Hearing Of The New Congress.”