Politics
Congressional Lawmakers Seek Federal Banking Data On Marijuana Business Ownership To Promote Industry Equity
As pressure builds for Congress to advance marijuana reform before the session ends, two lawmakers are asking the Financial Crimes Enforcement Network (FinCEN) to provide data on minority cannabis business ownership that they believe can inform equity-focused legislation.
Reps. Barbara Lee (D-CA) and Earl Blumenauer (D-OR), co-chairs of the Congressional Cannabis Caucus, sent a letter to FinCEN Acting Director Himamauli Das on Tuesday that seeks data that would help lawmakers identify marijuana industry barriers for minorities and small businesses.
“Specifically, we request data on the number of depository institutions that provided financial services to cannabis businesses, as well as a financial analysis and demographic breakdown of cannabis businesses that received banking and other financial services in 2021,” the letter says. “As the primary government entity charged with collecting and analyzing financial intelligence, FinCEN data would help inform federal efforts around equitably ending the racist cannabis prohibition.”
“Despite the cannabis industry’s growth and maturity, financial institutions that provide banking services to cannabis businesses risk criminal prosecution,” the letter continues. “Existing disparities in access to capital and financial services for individuals and businesses increase financial barriers and exacerbate the racial wealth gap, further harming those most harmed by the failed War on Drugs.”
For decades, POC have been shut out from financial services, which has exacerbated the racial wealth gap. The cannabis industry is no exception.@repblumenauer & I want to find equitable strategies to invest in those most harmed by the war on drugs. https://t.co/SMXe0zC2u6
— Rep. Barbara Lee (@RepBarbaraLee) November 16, 2022
For the past couple of years, FinCEN has been publishing basic data on the number of banks and credit unions that report working with state-legal cannabis businesses despite those ongoing concerns about possible exposure to federal enforcement actions.
As of September 30, 2021, there were 755 banks and credit unions that had filed requisite reports saying they were actively serving cannabis clients, the latest publicly posted FinCEN data shows. Thats up from 706 in the previous quarter and from a previous peak of 747 in late 2019.
The public data doesn’t provide demographic information about business ownership in the marijuana industry, but advocates have routinely called attention to the lack of minority representation in the sector, despite legislative efforts to promote participation by people from communities that have been disproportionately harmed under prohibition
“Given the increasing momentum of cannabis legalization and much-needed clarity from the federal government, Congress must devise a federal solution to equitably end the cannabis prohibition and encourage industry growth,” Lee and Blumenauer wrote. “As we work to invest in the communities disproportionately harmed in the failed War on Drugs, FinCEN data on access to financial services could help promote equitable access to financial services for small and minority-owned cannabis businesses.”
“FinCEN data could serve as a baseline for informing efforts around the creation of cannabis equity programs. For instance, data from FinCEN could aid marijuana decriminalization efforts and help determine how revenue collected by the government could be reinvested into small and minority-owned cannabis businesses.”
In September, the U.S. Treasury Department formally sent the White House a proposal to start collecting data on marijuana businesses from banks—alongside industries it already tracks like liquor stores, convenience stores, casinos and car dealers—as part of its ongoing efforts to combat money laundering activities.
“We welcome the opportunity to work with FinCEN to ensure Congress is equipped with the critical data needed to effectively address equity concerns when crafting solutions to end the federal cannabis prohibition,” the lawmakers’ new letter concludes.
Short of decriminalization or legalization, lawmakers and advocates have also argued that passing more modest reform to protect banks that work with cannabis companies would help facilitate needed access to capital that could translate into increased minority and small business participation in the marijuana industry.
To that end, Senate Majority Leader Chuck Schumer (D-NY) has been working to finalize a package of incremental marijuana legislation, which is expected to include cannabis industry banking protections, as well as expungements proposals.
Schumer recently said that Congress is getting “very close” to introducing and passing the marijuana bill, colloquially known as SAFE Plus, following discussions with a “bunch of Republican senators.”
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Sen. Cory Booker (D-NJ), who is also a primary sponsor of CAOA, said on Sunday that, because Republicans will have a majority in the House next session, Democrats who want to enact marijuana reform must either do it “now” during the lame duck or wait until “many years from now” when his party has a shot at controlling Congress again.
The NAACP’s board of directors approved a resolution last month calling for the “immediate passage” of a bipartisan marijuana banking bill and expressing support for federally legalizing cannabis. The Secure and Fair Enforcement (SAFE) Banking Act has passed the House in some form seven times now, only to stall in the Senate.
Two in three Americans want to see Congress pass a bill letting state-legal marijuana businesses access traditional banking services like checking accounts and loans, according to a poll from the American Bankers Association (ABA) that was released last month.
In September, the National Association of State Treasurers (NAST) agreed to reaffirm its support for a resolution calling on Congress to enact federal marijuana banking reform legislation.
Read the full text of the congressional letter to FinCEN about marijuana business data below:
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Photo courtesy of Philip Steffan.
