Federal Regulators Want Congress To Pass Cannabis Banking Now
Federal Regulators Urge Congress To Pass The SAFE Banking Act
The United States Need Cannabis Banking In Place Says Federal Regulators
The growth and development of the cannabis industry over the last 10 years has presented the most cultural change in recent times. As cannabis prohibition has been in place for many decades currently more than half of the United States has legalized cannabis in some form. A total of 36 states have legalized cannabis and 18 of those states have approved recreational use for those 21 years and older. A top research firm has documented that in 2020 legal sales in the U.S. hit over $17.5 billion. This made for a 46 percent jump in legal cannabis sales from the year prior.
However, during this time, a handful of cannabis-related businesses were not able to obtain financial services. This was due to the federal government not taking the necessary action to enact cannabis baking laws. With how fast the industry is growing and the amount of revenue that is being made cannabis banking is needed. With no legislation in place, it makes it practically impossible for cannabis businesses to get loans and other forms of financial aid. What this essentially does is put cannabis businesses in a position where they only work on a cash basis. This unreasonable condition is creating confusion and difficulty while hindering the cannabis industry’s growth.
Many were shocked when they discovered that credit unions and bank financial services providers can work with marijuana clients. They would need to follow anti-money laundering laws under the Bank Secrecy Act. As well as exercise due diligence and meet other basic obligations. Furthermore, the Treasury Department’s Financial Crimes Enforcement Network published guidance on marijuana businesses. This was done to further assist banks that want to work with legal cannabis businesses
What’s Next For Federal Cannabis Reform
Sadly, that guidance is a bit more obscure and unfinished in addition to being outdated. As a result, many banks are now, wary of essential risks. Which has directed banks to take a reluctant step into the breach and start working with marijuana-related businesses. As of December 2020, only 515 U.S. banks and 169 credit unions offered banking services to legal cannabis businesses. This info is data taking from FINCEN.
The National Credit Union Administration (NCUA), administers regulatory oversight of more than 5,000 federally insured credit unions. The point that about 169 of those which is under 3 percent are fine working with legal cannabis companies implies a serious market breakdown.
The responsibility does not fall on any of the financial services providers.
Many dominant people in the industry speak on how they would like to work with MRBs. However, they’re reluctant to do so. Mainly due to the fear and stigma encompassing the industry without any cannabis banking laws in place.
Congress will need to pass the SAFE Banking Act in order for things to progress. Yet until that happens people can help to push things along with some regulatory concerns at a federal level.
Some members of the NCUA Board, have formally requested the enterprise of a working group under the auspices (FFIEC). Aiming at the interagency body that develops uniform principles and standards for federal financial institution examinations. This will produce a responsible governmental unit that can concentrate on developing a preliminary governing framework. The type of framework that can be shared among other regulators and members of Congress.
Final Thoughts On Federal Regulators Pushing For Cannabis Banking
Creating regulations and adapting to federal law to expand access to the banking system for MRBs is a significant move. To be certain, there are other regulatory matters that will need to be resolved as well. More so on a federal level related to consumer security, environmental entanglements as well as other areas. Those issues will need further activity from legislators and regulators in those fields.
In fact, in comparison to some of these problems, discussing financial matters should be comparatively straightforward. Approaching from a basic level if we need to address what is lacking with financial assistance for MRB’s that other businesses do obtain. For instance, MRB’s should be able to e deposits; access options for commercial lending at competitive market rates. As well as secure access to electronic payment processing so they can reduce reliance on cash transactions.
If these can happen for cannabis businesses it will be a great asset for the industry at large. Most experts recognize the ultimate legalization of marijuana at the federal level is eventually going to happen. Right now it’s a waiting game and a matter of when not if. Overall cannabis baking is needed to push the industry forward. Not to mention having marijuana-related businesses being able to access the same aid other financial institutes offer other nonrelated cannabis businesses.