Linda Lacewell, superintendent of the state Department of Financial Services, along with more than 20 other state financial regulators, wrote a letter to Congressional leaders asking for a safe harbor for marijuana banking.
The letter was addressed to House Speaker Nancy Pelosi, D-Calif.; Senate Minority Leader Chuck Schumer, D-N.Y.; House Minority Leader Kevin McCarthy, R-Calif.; and Senate Majority Leader Mitch McConnell, R-Ky.
In the letter, the regulators explained how Congress has an opportunity to address a large conflict between federal and state law when it comes to marijuana policy.
“As of January 1, 2019, medical marijuana is available in 33 jurisdictions, representing 67 percent of the country’s population,” they wrote. “Nearly a dozen states have established adult-use marijuana programs and more states are likely to establish similar programs.”
The state banking supervisors said that while these marijuana-related businesses in these jurisdictions are licensed and overseen by competent and skilled state agencies, they still face challenges establishing and maintaining stable banking relationships with financial institutions due to the risks posed to the institutions.
“Barriers for financial institutions and ancillary businesses to serve marijuana create a risk from the lack of robust and comprehensive regulation and supervision and a diminished ability to identify operators acting to circumvent federal and state licensing and regulatory frameworks,” the letter states. The regulators said they were particularly concerned with their ability to track the flow of funds, issues of public safety due to cash volume and a loss of economic activity.
“The looming threat of civil actions, forfeiture of assets, reputational risk and criminal penalties is not conducive to a legal, regulated marketplace,” they said.
“We urge Congress to consider legislation that creates a safe harbor for financial institutions to serve a state-compliant business or entrusts sovereign states with the full oversight and jurisdiction of marijuana-related activity. Establishing a safe harbor for banks to serve these entities would help reduce the risk associated with large cash-and-carry operations and bring safeguards, activities and sales into the regulatory reporting compliance framework.”
As previously reported, the House Financial Services Committee recently passed the Secure and Fair Enforcement Banking Act, commonly referred to as the SAFE Banking Act. The legislation would provide a safe harbor for financial institutions, including credit unions, serving marijuana businesses in states where it is legal to do so.
The New York Credit Union Association strongly supports the SAFE Banking Act and will continue to work with lawmakers, their staff and regulators to ensure credit unions can access and serve the cannabis industry.