More than half of the United States, the District of Columbus, and several territories have enacted medicinal or recreational cannabis policy reform within the past 22 years, but the federal government’s continued classification of marijuana as a Schedule I narcotic presents obstacles for businesses when it comes to banking.
With the reality of criminal and civil liabilities, many financial institutions are hesitant to work with cannabis companies.
Current federal policy mandates that, regardless of state law, transactions made in connection with marijuana-related businesses are to be treated as suspicious, requiring a Suspicious Activity Report to be filed for each one made.
As a result, much of the growing industry still functions on cash-based transactions.
“Our banking system must be flexible enough to address the needs of businesses in the various states and territories,” wrote the National Association of Attorneys General in a letter to Congress in May. “This includes a banking system for marijuana-related businesses that is both responsive and effective in meeting the demands of our economy.”
But the issue is being brought to Congress this week as the United States Senate Committee on Banking and Urban Affairs will be holding a hearing to discuss the banking problems that the cannabis industry currently faces under the weight of Schedule I restrictions.
The hearing, entitled “Challenges for Cannabis and Banking: Outside Perspectives,” will include testimony from Maps Credit Union owner, Rachel Pross, Citywide Banks President Joanne Sherwood, Smart Approaches to Marijuana VP Garth Van Meter, and LivWell Enlightened Health owner and CEO John Lord.
Senators Jeff Merkley [D-OR] and Cory Gardner [R-CO] will also testify at the hearing.
In April, Gardner and Senator Elizabeth Warren [D-MA] reintroduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, a bill to ensure that each state and territory has the right to determine the best approach to cannabis within their borders
The STATES Act also addresses financial issues caused by federal prohibition by preventing compliant cannabis transactions from being treated as trafficking.
The Challenges for Cannabis and Banking: Outside Perspectives hearing is scheduled for 10:00 a.m. on Tuesday, July 23 at the Dirksen Senate Office building.
A live video feed will be available during the hearing.
