Senators Push Treasury Department to Loosen Marijuana Banking Restrictions
While the legal marijuana industry already generates billions of dollars across the United States, the industry has one big difference with other sectors of the economy. The majority of those transactions happen in cash.
Because federal law continues to list marijuana as an illegal drug, banks remain wary of providing banking services to cannabis-related businesses despite the fact that more than half the states have legalized medical marijuana and eight now have legalized recreational marijuana. A group of senators have taken on the issue by pushing the US Treasury Department to clarify guidelines to allow business -- like landlords, building trades and the security services needed to transport cash -- to
unfettered access to banking services. The bi-partisan group includes two prominent Democrats, Vermont Sen. Bernie Sanders and Massachusetts Sen. Elizabeth Warren.
Sen. Jeff Merkley leads the group. His home state of Oregon was among the first to legalize both recreational and medical marijuana. The group also includes Republican Sen. Lisa Murkowski of Alaska and independent Sen. Angus King of Maine. Sanders still identifies as independent, but caucuses with the Democrats and is a member of the Democrats leadership team.
Issue extends beyond marijuana businesses.
In a letter sent to the Financial Crimes Enforcement Network, a federal regulator, the group of senators asked for a clear ruling on businesses that deal with marijuana.
This extends beyond businesses that deal directly with producing and selling marijuana. According to the senators, the issue impacts other individuals and companies that provide services to the marijuana industry. In some cases, professionals have had access to their bank accounts, credit accounts and even retirement accounts blocked because of a business association with the marijuana industry, the senators wrote.
They said these include:
- Chemists, who test marijuana to ensure it has no harmful materials
- Security companies, who marijuana companies must turn to because the big amounts of cash they deal with every day
- Landlords who rent to marijuana companies
- Lawyers who provide legal services to marijuana companies
- Service industry companies, such as plumbers and electricians, who work with marijuana businesses
“These legitimate, indirect businesses have been unable to open checking accounts and accept credit cards or checks. In some cases they have also lost access to existing accounts, such as retirement accounts, and have been forced to pay their employees, taxes, and bills in cash,” the senators wrote. “Locking lawyers, landlords, plumbers, electricians, security companies, and the like out of the nation's banking and finance systems serves no one's interest.”
Why change is needed.
The primary reason listed by advocates for banking rule changes is the amount of cash marijuana businesses have to handle. This leads to three main issues, according to the Colorado Banking Association.
After Colorado legalized both medical and recreational marijuana, the association released a report that addressed concerns over current banking laws in relation to marijuana. They noted that giving access to banking services would give marijuana businesses the ability to “conduct legal transactions in a normal fashion.”
They also noted that moving away from cash-only transactions would prove far easier for tax collection and also eliminate safety concerns surrounding cash-only businesses.
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