Federal Financial Regulatory Agency Head Says Marijuana Banking Among Most Challenging Issues
The head of the Federal Deposit Insurance Corporation (FDIC) said this week that marijuana business banking represents one of the most “challenging issues that I have encountered” at the agency.
“At a federal level it is still an illegal substance. And at many state levels, it’s now legal, and it’s legal to frankly bank it at a state level,” Chair Jelena McWilliams said. “And so banks find themselves caught between the federal regulatory regime and the state.”
While Congress continues to debate legislation to resolve the conflict, McWilliams told Crain’s Detroit that in the interim, she tells banks there’s “so much uncertainty in this space that as a federal regulator, I still have to say, it’s illegal to bank marijuana. But to the extent that you’re doing it because it’s legal in your state, please follow FinCEN guidance.”
“We know we have banks that are banking marijuana businesses, and you know, we can’t bless them and say ‘go ahead and do it,'” she added. “But to the extent you’re doing it because it’s legal in your state, follow FinCEN guidance.”
The Financial Crimes Enforcement Network (FinCEN) issued guidance in 2014 for financial institutions that service cannabis businesses.
Advocates have been encouraged that the bipartisan Secure and Fair Enforcement (SAFE) Banking Act could still advance through Congress this year. The legislation, which would protest banks that service cannabis businesses from being penalized by federal regulators, cleared the House last year and now awaits action in the Senate Banking Committee.
Separately, the bill’s language was inserted into a House-passed coronavirus relief package last month. Its chief sponsor in the chamber, Rep. Ed Perlmutter (D-CO), recently said he feels there’s a 50-50 chance the legislation will make it past the Senate.
Multiple Republican lawmakers criticized the inclusion of the marijuana banking language in the House package, arguing that it is not germane and is part of a Democratic wish list. However, its Senate sponsor, Sen. Cory Gardner (R-CO), told Marijuana Moment he disagrees and feels the SAFE Banking Act should advance through the vehicle of COVID legislation.
Beyond the bipartisan support for the standalone bill in the House last year, a coalition of 34 state and territory attorneys general—including seven Republicans—are urging Congress to pass the coronavirus legislation with the banking language.
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