Serving marijuana ventures can prove to be risky business for banks, but new federal legislation sponsored by a Colorado Democrat who has his eye on the governorship seeks to remedy that.
U.S. Rep. Ed Perlmutter, a Democrat from Arvada, introduced the Secure and Fair Enforcement Banking Act (SAFE Banking Act) last week, which would protect financial institutions serving marijuana businesses from federal government reprisal. Perlmutter is co-sponsoring the legislation with U.S. Reps Denny Heck, a Democrat from Washington, and Don Young, an Alaskan Republican.
With the federal government classifying marijuana as an illegal substance, banks providing services to legitimate cannabis businesses could find themselves subject to criminal and civil liability for “aiding and abetting” a federal crime and/or money laundering under the Controlled Substances Act and federal banking statutes.
The bill provides “safe harbor” protections for depository institutions who provide a “financial product or service” to a covered business, Perlmutter said.
“For example, federal banking regulators would not be able to threaten or limit a bank or credit union’s deposit insurance, take any action or downgrade a loan made to a covered business, or force a depository institution to halt providing any kind of banking services to a marijuana-related legitimate business,” Perlmutter said in a statement.
Many cannabis proprietors have no access to the banking industry and have to operate as purely cash businesses, unable to accept credit cards, deposit their profits or write checks to pay employees or taxes.
With so much cash on hand, businesses become targets for robberies, Perlmutter said. He cited the death of security guard Travis Mason, who was shot to death by two armed men during a robbery attempt at Green Heart marijuana dispensary in Aurora as a consequence of the current system.
“With the majority of states now allowing for some form of recreational or medical marijuana, we have reached a tipping point on this issue and it’s time for Congress to act,” said Perlmutter. “Allowing tightly regulated marijuana businesses the ability to access the banking system will help reduce the threat of crime, robbery and assault in our communities and keep the cash out of cartels.”
Similar bills have been introduced in Congress in the past and failed, but this session Perlmutter hopes to capitalize on the momentum of several successful ballot measures from November 2016.
“From past appropriations votes, we know there is enough support to pass my marijuana banking legislation if it were to come to the floor of the House today,” Perlmutter told The Colorado Statesman. “It’s been a challenge to even get a hearing for my legislation in the Financial Services Committee, but I will continue to work every channel to advance this legislation in any way I can.”
Nearly a quarter of the country lives in a state where adult use is legal, Heck pointed out in a statement, “and yet because of these federal restrictions, cash will continue to reign just as it did on the black market.”
“To keep the money out of the hands of drug cartels, and to keep marijuana out of the hands of kids, and to protect the industry from more deadly armed robberies, we need a system that allows for electronic financial transactions,” Heck said. “Voters across the country of all political backgrounds have shown they are serious about taking the right steps to regulate marijuana like alcohol, and those steps must include access to the banking system.”
Under former President Barack Obama’s administration, the Department of Justice said it wouldn’t prosecute finance companies providing services to legal marijuana businesses as long as they adhered to compliance guidelines.
Perlmutter said banks are looking for certainty, which would mean aligning federal and state law rather than solely relying on regulatory guidance.
“There has been a lack of clarity in President (Donald) Trump’s position on marijuana, and we know from past statements that Attorney General (Jeff) Sessions is not somebody who favors marijuana,” Perlmutter said. “I believe the uncertainty surrounding the administration’s position could be a risk for banks and credit unions as well as marijuana-related businesses.”
A similar companion bill in the Senate is expected to be re-introduced later this month.
Colorado U.S. Reps. Mike Coffman, Diana DeGette and Jared Polis are also supporting the legislation as co-sponsors.
Content originally published by Colorado Statesman on May 8, 2017.