As a Senate committee prepares to take up the issue of debanking at a hearing on Wednesday, one of the invited witnesses is proactively calling attention to marijuana industry banking access challenges under federal prohibition and urging Congress to enact bipartisan reform to address it.<\/p>\n
While the chairman of the Senate Banking Committee, Sen. Tim Scott (R-SC), insisted that the debanking conversation will center on \u201cfederally legal\u201d enterprises that have lost financial services\u2014presumably excluding cannabis businesses that are federally illegal\u2014the Brookings Institution\u2019s Aaron Klein took the opportunity to address the unique industry problem in written testimony submitted for the hearing.<\/p>\n
Klein pointed out that, under current federal guidance, banks are required to fill out suspicious activity reports, or SARs, if they choose to work with state-legal marijuana businesses. He stressed the expenses of such reporting, arguing that such costs \u201care passed back on to consumers and businesses both generally and specifically toward those who are the subject of SAR filings.\u201d<\/p>\n
\u201cConsider the reporting required of banking a person who works at a state-licensed cannabis company. Because cannabis is illegal under federal law, banks must flag these workers\u2019 accounts as suspicious and begin copious reporting,\u201d he said. \u201cFailure to do so, or reporting less than is expected, can trigger regulatory fines and other sanctions. For many banks, these costs are simply not worth it, leading them to deny services and debank people and businesses.\u201d<\/p>\n
\u201cThe same is true for state-licensed cannabis companies. One report from my state of Maryland indicated that only three banks or credit unions in the state will bank cannabis companies and they charge around $20,000 per year to open and maintain a simple bank account,\u201d he continued. \u201cThese costs reflect both a lack of competition and the high regulatory burden banks and credit unions face due to all of the filings required for these businesses.\u201d<\/p>\n
\u201cAs a result, many cannabis companies are effectively debanked and forced to operate with cash (since payment processing firms are wary of finding themselves debanked for serving cannabis companies), which makes these business targets for criminals,\u201d Klein said in his written testimony.<\/p>\n
\u201cWhat is the marginal value gained by banks filing SARs and reporting on cannabis companies? If law enforcement wants to find and shut down cannabis businesses there is a much cheaper, faster method: search Google Maps. If you want to find who owns these companies go to the state capital where there are substantial records filed.\u201d<\/p>\n
The witness also included a series of recommendations for the committee\u2019s consideration, including improving and passing the Secure and Fair Enforcement (SAFE) Banking Act to protect financial institutions from being penalized by federal regulators over their work with state-legal cannabis businesses.<\/p>\n
\u201cSpecifically with respect to debanking cannabis, the SAFE Banking Act, which passed the Banking Committee last year, would be a helpful piece of legislation,\u201d Klein said<\/a>. \u201cHowever, because it does not directly address any element of the costly and unproductive SAR filing associated with banking state-licensed cannabis companies, I fear the bill\u2019s impact would likely underwhelm what its proponents have argued.\u201d<\/p>\n \u201cI encourage the Committee to either combine SAFE Banking with broader SARs reform or enhance SAFE Banking to address the problems with SARs filing on state-licensed cannabis businesses,\u201d he said.<\/p>\n Meanwhile, congressional researchers recently released a report detailing the subject of debanking\u2014while making a point to address how the marijuana industry\u2019s financial services access problem \u201csits at the nexus\u201d<\/a> of a state-federal policy conflict that complicates the debate.<\/p>\n The Banking Committee passed a version of the SAFE Banking Act in September 2023 under Democratic control. And stakeholders have been holding out hope that, beyond the written testimony, the issue will be raised again in the panel when it takes up debanking issues on Wednesday.<\/p>\n However, while marijuana workers and industry associations have been reaching out to the committee with their stories of losing bank accounts over their association with cannabis, it\u2019s unclear if that will compel the anti cannabis chairman to proactively address it, as he opposed the SAFE Banking Act and stressed that the upcoming hearing will focus on \u201clegal\u201d enterprises.<\/p>\n The SAFE Banking Act is expected to be filed again this session\u2014but that introduction is \u201cnot imminent\u201d as some recent reports have suggested,<\/a> a spokesperson for the GOP House sponsor of the last version told Marijuana Moment last month.<\/p>\n \u201cWhile introduction is not imminent, we hope to have a firmer update on timing within the coming weeks,\u201d the staffer for Rep. Dave Joyce (R-OH) said.<\/p>\n With Republicans now in control of the House and Senate\u2014and leadership having historically opposed even modest cannabis legislation, including the banking bill\u2014there are open questions about the prospects of advancing marijuana reform this session.<\/p>\n However, some are holding out hope that a measure to allow cannabis industry banking access could move, especially given President Donald Trump\u2019s endorsement of the proposal on the campaign trail.<\/p>\n Separately, the Government Accountability Office (GAO) announced in December that it\u2019s convening focus groups comprised of marijuana businesses<\/a>\u00a0to better understand their experiences with access to banking services under federal prohibition.<\/p>\n The industry remains frustrated with the lack of progress on the cannabis banking issue under the last administration.<\/p>\n A Senate source told Marijuana Moment in December that Republican House and Senate leadership \u201copenly and solely blocked\u201d then-Senate Majority Leader Chuck Schumer\u2019s (D-NY) attempt<\/a>\u00a0to include the bill in a government funding bill as the session came to a close.<\/p>\n Sens. Elizabeth Warren (D-MA) and Tommy Tuberville (R-AL) had\u00a0challenged the idea that there was enough GOP support<\/a>\u00a0for the SAFER Banking Act to pass on the Senate floor during the lame duck session.<\/p>\n Warren accused certain Republican members of overstating support for the legislation within their caucus, while also taking a hit at Trump for doing \u201cnothing\u201d on cannabis reform during his time in office as he makes a policy pivot ahead of the election by\u00a0coming out in support of the marijuana banking bill and federal rescheduling<\/a>.<\/p>\n Sen. John Hickenlooper (D-CO) also recently argued in an interview with Marijuana Moment that the main barrier to getting the marijuana banking bill across the finish line is a lack of sufficient Republican support in the chamber. And he said if Trump is serious about seeing the reform he recently endorsed enacted,\u00a0he needs to \u201cbring us some Republican senators.\u201d<\/a><\/p>\n Prior to becoming House speaker,\u00a0Rep. Mike Johnson (R-LA) consistently opposed cannabis reform<\/a>, including on incremental issues like cannabis banking and making it easier to conduct scientific research on the plant.<\/p>\n Meanwhile, on the one-year anniversary of a Senate committee\u2019s passage of the SAFER Banking Act in September, the Congressional Budget Office (CBO)\u00a0released an analysis on the economic impact of the reform<\/a>, including the likely increase in federally insured deposits from cannabis businesses by billions of dollars once banks receive protections for servicing the industry.<\/p>\n Separately, the CEO of the financial giant JPMorgan Chase said recently that the company\u00a0\u201cprobably would\u201d start providing banking services to marijuana businesses<\/a>\u00a0if federal law changed to permit it.<\/p>\n GOP Congressman Withdraws Amendment Aimed At Undermining Marijuana Rescheduling Process<\/a><\/p>\n<\/blockquote>\n\n The post Marijuana Industry Is \u2018Effectively Debanked\u2019 And \u2018Forced\u2019 To Operate On Cash, Witness Tells Senate Committee<\/a> appeared first on Marijuana Moment<\/a>.<\/p>\n
As a Senate committee prepares to take up the issue of debanking at a hearing on Wednesday, one of the invited witnesses is proactively calling attention to marijuana industry banking access challenges under federal prohibition and urging Congress to enact bipartisan reform to address it. While the chairman of theContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":458,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18,81],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/80073"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/458"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=80073"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/80073\/revisions"}],"predecessor-version":[{"id":80074,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/80073\/revisions\/80074"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=80073"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=80073"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=80073"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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\nRead More: Marijuana Industry Is \u2018Effectively Debanked\u2019 And \u2018Forced\u2019 To Operate On Cash, Witness Tells Senate Committee<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"