On Tuesday, July 23, the Senate Banking Committee, led by Chairman Crapo (R-ID) and Ranking Member Brown (D-OH) held a hearing on “Challenges for Cannabis and Banking: Outside Perspectives.” The first panel was comprised of Senators Cory Gardner (R-CO) and Jeff Merkley (D-OR), cosponsors of S. 1200, the Secure And Fair Enforcement (SAFE) Banking Act, which would provide a safe harbor for financial institutions that accept funds from cannabis businesses and ancillary businesses that work with the cannabis industry. Under current federal law, cannabis is an illegal controlled substance, so federally-insured banks are barred from accepting funds from them, or risk violating anti-money laundering laws. However, thirty-three states and the District of Columbia have legalized cannabis use in some form, presenting challenges to both the state-sanctioned cannabis businesses and financial institutions. Senators Gardner and Merkley explained how the disconnect between the laws in their home states – both of which have booming legal-cannabis industries – and federal law are having negative impacts on their constituency, from increased risk of crime (due to having to work in an all-cash industry) to difficulty collecting taxes.
The second panel included witnesses from the Credit Union National Association (CUNA) and the American Bankers Association (ABA), who explained how, as the cannabis industry grows, so does the network of other industries that intersect with it, including transportation, property management, even accounting and legal services. This means that more and more businesses are at risk of being in violation of federal law, and that it is difficult for financial institutions to ascertain if they are accepting money from a business that is in any way connected with the cannabis industry. They also outlined the many ways that financial institutions are already working with the federal government to prevent money laundering, and that, should they be able to legally work with cannabis businesses, they would be able to provide important information to the government through their regular reports on the financial state of that industry and its impact on the economy.
NAR sent a letter of support for the SAFE Banking Act to the Committee. The cannabis industry is especially tied to real estate – it requires land, warehouses, storefronts, etc., and many REALTORS® have clients that are in some way connected to it. It is important that Congress act to allow these state-sanctioned businesses access to banking services, both to improve the safety of those communities and to have clearer compliance and oversight of the industry itself.