Cannabis Advocates Grow Hopeful as Congressional Committee Approves Marijuana Banking Bill
In a vote that congressional advocates hope could pave the way towards federal legalization of marijuana by the end of 2019, the House Financial Services Committee recently voted to advance a bill that would prevent federal banking regulators from punishing financial institutions for working with marijuana businesses that operate legally under state, local, or tribal law. In a rare bipartisan committee vote, passage of this legislation by the full House would allow marijuana businesses more access to banks and lenders and permit them to store profits in financial institutions as opposed to operating strictly as cash businesses.
This change in the law is intended to increase the safety around these exclusively cash businesses. In recent years, marijuana dispensaries have become targets for hold-ups and robberies, as federal law had prevented them from being able to deposit cash profits in banks or obtain lending from financial institutions, which in turn guaranteed that these businesses always had ample cash on-hand. Additionally, integrating marijuana companies into the financial regulatory framework will make them subject to greater scrutiny and federal oversight, providing reassurance to those concerned that organized crime or other illicit operations might be using these companies to launder money or evade taxes. Ideally, this will lead investors to see the marijuana industry as a safe investment as opposed to one that comes with the stigma attached to an all-cash business.
The bill also benefits the marijuana industry by permitting insurance carriers to voluntarily pay for medical marijuana treatment. In some instances, insurance carriers have been compelled by state law to provide medical marijuana to patients, which in turn exposed the carriers to potential federal criminal liability. While this bill provides those carriers with a “safe harbor,” insurance industry insiders would prefer that marijuana be removed from federal schedule I classification altogether to further ensure there is no risk to them for complying with state law.
Also, acknowledging that the war on drugs had been waged in a racially disproportionate manner, the bill requires federal regulators to study what barriers currently exist to minority-owned and women-owned entry to the industry in order to expand access to those groups.
Some state banks and smaller financial institutions have cautiously begun to work with marijuana business, however larger institutions have avoided doing so out of concern for criminal liability for federal money laundering. The aim of this bill is to increase the safety surrounding not just the day-to-day operations of dispensaries and burnish the legitimacy of the industry as a whole by subjecting it to banking regulation and monitoring.