New York Attorney General Letitia James, along with 37 other attorneys general, wrote a letter to Congressional leaders urging the passage of legislation to allow 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.; Senate Majority Leader Mitch McConnell, R-Ky; Senate banking committee Chairman Mike Crapo, R-Idaho; House Majority Leader Steny Hoyer, D-Md.; House Minority Whip Steve Scalise, R-La.; House Majority Whip James Clyburn, D-S.C.; Senate Minority Whip Richard Durbin, D-Ill.; and Senate banking committee Ranking Member Sherrod Brown, D-Ohio.
In the letter, the attorneys general explained how Congress has an opportunity to address a large conflict between federal and state law when it comes to the marijuana policy. They also explained how this risk has significantly constrained the ability of financial institutions to provide services to these business and companies.
“This issue is of broad relevance: for example, thirty-three states and several U.S. territories have legalized the medical use of marijuana,” they wrote. “However, because the federal government classifies marijuana as an illegal substance, banks providing services to state-licensed cannabis businesses and even to other companies which sell services and products to those businesses could find themselves subject to criminal and civil liability under the federal Controlled Substances Act and certain federal banking statute.”
The attorneys general also noted that despite the contradictions between the federal and state law, the marijuana industry is growing rapidly.
“Industry analysts estimate 2017 sales at $8.3 billion and expect those totals to exceed $25 billion by 2025,” the letter states. “Yet those revenues are handled outside of the regulated banking system. Businesses are forced to operate on a cash basis. The resulting grey market makes it more difficult to track revenues for taxation and regulatory compliance purposes, contributes to a public safety threat as cash-intensive businesses are often targets for criminal activity, and prevents proper tracking of billions in finances across the nation.”
To tackle the issue, the AGs urged Congress to advance the Secure and Fair Enforcement Banking Act, commonly referred to as the SAFE Banking Act.
“An effective safe harbor would bring billions of dollars into the banking sector, enabling law enforcement; federal, state and local tax agencies; and cannabis regulators in 33 states and several territories to more effectively monitor cannabis businesses and their transactions,” they explain. “Compliance with tax laws and requirements would be simpler and easier to enforce with the regulated tracking of funds in the banking system, resulting in higher tax revenues.”
As previously reported, the House Financial Services Committee passed the SAFE Banking Act this past March. 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 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.