The number of banking institutions that are actively servicing accounts for marijuana businesses has grown by nearly 20 percent since the beginning of the year, according to newly released federal data.
As of the end of September, there were 375 banks and 111 credit unions maintaining financial services for cannabis businesses, according to a report published this month by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
It is the latest in a series of quarterly updates the agency has issued, which together have shown steady growth in the number of financial services providers that are willing to work with the cannabis industry despite its continued federal illegality.
The new data comes as marijuana reform continues its political ascendancy. During this month’s midterm elections, Michigan voters approved marijuana legalization and those in Missouri and Utah passed medical cannabis measures. Several new pro-legalization governors are set to take office in January. And Democrats took control of the U.S. House of Representatives, where cannabis legislation is expected to be more seriously considered in 2019 than it has been over the past several years. One of the most-sought reforms by marijuana businesses is greater clarity on their ability to access banks.
In 2014, under the Obama administration, FinCEN issued guidance to banks about how to serve the marijuana industry without running afoul of federal regulators. The memo, which requires financial services providers to regularly file reports on customers with cannabis accounts, was meant to provide assurances to banks. But many have remained reluctant to work with marijuana businesses because ongoing federal cannabis prohibition could trigger money laundering laws and other risks.
In October, the American Bankers Association began surveying its members about the issues they face in serving cannabis businesses.
“We believe the time has come for Congress and the regulatory agencies to provide greater legal clarity to banks operating in states where cannabis has been legalized for medical or adult use,” a spokesperson for the organization said at the time.
“The [marijuana banking] reporting structure laid out in the 2014 guidance remains in place,” the new FinCEN report, which was first spotted by Cannabis Wire, says. “FinCEN will continue to work closely with law enforcement and the financial sector to combat illicit finance, and we will notify the financial sector of any changes to FinCEN’s” cannabis reporting procedures.
When then-U.S. Attorney General Jeff Sessions moved in January to rescind separate Obama-era guidance that generally protected state marijuana laws from federal interference, industry participants feared that it would spook major businesses like banks from associating with cannabis operators.
The new FinCEN data showing steady growth in the number of financial institutions maintaining marijuana industry accounts indicates that those fears were largely unfounded.
Meanwhile, a number of key Trump administration officials have indicated they want to see a clarity on cannabis banking issues.
For example, Steven Mnuchin, the treasury secretary, has suggested in congressional testimony that he wants state-legal marijuana businesses to be able to store their profits in banks.
“I assure you that we don’t want bags of cash,” he told a House committee in February. “We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe.”
In a separate hearing he said that resolving marijuana banking issues is at the “top of the list” of his concerns.
Federal Reserve Chairman Jerome Powell said in June that the disparity between local and national marijuana laws “puts federally chartered banks in a very difficult situation.”
“It would great if that could be clarified,” he said.
That same month, Federal Deposit Insurance Corporation Chairwoman Jelena McWilliams said that while she directed her staff to consider ways to address the issue, the agency’s hands are “somewhat tied” until federal law changes.
Comptroller of the Currency Joseph Otting said last month that he is “hopeful there’s enough momentum in that direction” toward solving marijuana businesses’ banking access issues and that forcing them to operate in cash is “generally not healthy.”
Pressure is also coming from the states. In August, a coalition of the top financial regulators in 13 states sent a letter demanding Congress take action to protect banks that work with marijuana businesses.
Despite the growing call for clarity on the issue, key committees in the House and Senate rejected amendments this summer that would have prevented federal banking regulators from punishing financial institutions for serving the marijuana industry.
Standalone legislation to provide permanent protections to banks that work with cannabis businesses have garnered increasing numbers of cosponsors in both chambers, though they haven’t been scheduled for hearings or votes.
It remains to be seen whether a Democratic House will move cannabis banking legislation in 2019, and whether the Republican-controlled Senate would go along.
Portions of this story were previously published on Forbes.
Illinois Gets More Tax Revenue From Marijuana Than Alcohol, State Says
Illinois took in more tax dollars from marijuana than alcohol for the first time last quarter, according to the state Department of Revenue.
From January to March, Illinois generated about $86,537,000 in adult-use marijuana tax revenue, compared to $72,281,000 from liquor sales.
Those following the cannabis market in Illinois might not be entirely surprised, as the state has consistently been reporting record-breaking sales, even amid the pandemic. In March alone, adults spent $109,149,355 on recreational cannabis products—the largest single month of sales since retailers opened shop.
It was in February that monthly cannabis revenues first overtook those from alcohol, a trend that continued into March.
If the trend keeps up, Illinois could see more than $1 billion in adult-use marijuana sales in 2021. Last year, the state sold about $670 million in cannabis and took in $205.4 million in tax revenue.
Officials have emphasized that the tax dollars from all of these sales are being put to good use. For example, the state announced in January that it is distributing $31.5 million in grants funded by marijuana tax dollars to communities that have been disproportionately impacted by the war on drugs.
The funds are part of the state’s Restore, Reinvest, and Renew (R3) program, which was established under Illinois’s adult-use cannabis legalization law. It requires 25 percent of marijuana tax dollars to be put in that fund and used to provide disadvantaged people with services such as legal aid, youth development, community reentry and financial support.
Awarding the new grant money is not all that Illinois is doing to promote social equity and repair the harms of cannabis criminalization. Gov. J.B. Pritzker (D) announced in December that his office had processed more than 500,000 expungements and pardons for people with low-level cannabis convictions on their records.
Relatedly, a state-funded initiative was recently established to help residents with marijuana convictions get legal aid and other services to have their records expunged.
But promoting social equity in the state’s cannabis industry hasn’t been smooth sailing. The state has faced criticism from advocates and lawsuits from marijuana business applicants who feel officials haven’t done enough to ensure diversity among business owners in the industry.
Colorado Marijuana Sales Reached $167 Million In February
Colorado’s overall cannabis sales for the first two months of 2021 are $78 million higher than those for January and February of 2020.
By Robert Davis, The Center Square
Total marijuana sales in Colorado reached $167 million in February, the state’s revenue department announced on Friday.
The total represents a $20 million decline in sales from the previous month. However, Colorado’s overall sales for the first two months of 2021 remain $78 million above the pace set between January and February of 2020.
Marijuana sales are calculated by adding the total sales for both medical and recreational marijuana sales in Colorado’s 64 counties.
Denver County led all others in total recreational sales with over $38 million. Arapahoe and Adams counties followed suit with $13 million and $11 million in recreational sales, respectively.
Denver also led the way in medical marijuana sales, bringing in a total of $14 million. El Paso County was a close second, reaping over $10 million in medical sales.
Sales are not automatically accounted for in the state’s accounting system. This means the Department of Revenue (CDOR) relies on each county to report their sales before reporting the total. In effect, marijuana sales are reported one month behind tax and fee revenue totals.
Meanwhile, Colorado collected over $33 million in tax revenue in March. This total represents both taxes levied from medical and recreational marijuana sales, as well as license and application fees.
Between February and March, state tax revenue from marijuana sales declined 4 percent, according to CDOR data.
Tax revenue comes from a 2.9 percent state sales tax on marijuana sold in stores, a 15 percent state retail marijuana sales tax, and a 15 percent state retail marijuana excise tax on wholesale sales or transfers of retail marijuana.
Uber Will ‘Absolutely’ Explore Marijuana Deliveries When Federal Prohibition Ends, CEO Says
The CEO of Uber said on Monday that the ride share company will “absolutely” explore adding marijuana deliveries to its services when federal prohibition ends.
Dara Khosrowshahi was asked about the prospect of expanding his business to include cannabis deliveries during an interview with CNBC. He said while the company remains focused on grocery and alcohol deliveries, in addition to its core ridesharing service, that’s certainly in the cards if marijuana is federally legalized.
Uber is interested in “the types of deliveries that a high percentage of consumers are going to want delivered fast into their home and are quite frequent,” he said. “We think, obviously, food, grocery, pharmacy and alcohol are part of that category,” but cannabis also holds potential.
“When the road is clear for cannabis when federal laws come into play, we’re absolutely going to take a look at it,” Khosrowshahi said. “But right now with grocery, with food, with alcohol, et cetera, we see so much opportunity out there and we’re going to focus on the opportunity at hand.”
Could you get your weed delivered through Uber? CEO Dara Khosrowshahi discusses the potential business strategy: "When the road is clear for cannabis and federal laws come into play, we're absolutely going to look at it." (via @CNBCTechCheck) https://t.co/6VM454ugka pic.twitter.com/bRjpv7vvhU
— CNBC (@CNBC) April 12, 2021
The tech executive was specially asked about the possible expansion into the cannabis market in light of legalization recently being enacted in New York. And if polling from that state is any indication, Uber would see the demand for deliveries that it’s looking for, as 53 percent of New Yorkers said in a survey that they would favor having that option available to consumers.
But for now, the CEO said the business is keeping its eyes on current expansions, which includes its recent acquisition of the alcohol delivery service Drizly. That company did launch an ancillary cannabis delivery service called Lantern—but following the Uber deal, it announced that the two entities would be separated, with Lantern operating independently as a private company.
Of course, as a national corporation, Uber is also making a risk assessment given the ongoing ban on cannabis at the federal level. But a policy change to that end could come sooner than later.
Senate Majority Leader Chuck Schumer (D-NY) has said that a bill to legalize marijuana that he’s been working on with Senate Finance Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) will be released “shortly.”
On the House side, Judiciary Chairman Jerrold Nadler (D-NY) has similarly signaled that his cannabis descheduling bill—the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act—will be reintroduced this session. That proposal passed the House last year but did not advance in the Senate.
With Democrats in control of both chambers and the White House this session, there’s renewed hope among advocates that the days of prohibition are soon to be over. Still, questions remain about President Joe Biden’s role in the reform, as he opposes adult-use legalization and his press secretary said last month that his position “has not changed” to that end.
In any case, Uber’s apparent interest in participating in the market once those federal barriers are lifted is another sign of the industry’s potential. That said, many advocates have expressed that small businesses—particularly those operated by people most impacted by cannabis criminalization—should be prioritized in any legalization legislation over large companies.