As lawmakers work to advance marijuana banking reform, a coalition of cannabis regulators representing 40 U.S. states and territories are explaining to Congress just what the current lack of access to traditional financial services means—not just for the businesses and the programs they oversee, but for the regulators navigating this federal-state conflict themselves.
The non-partisan Cannabis Regulators Association (CANNRA), which doesn’t take a stand on legalization itself, sent a letter to congressional leaders on Wednesday, outlining three key areas of concern for their states’ respective marijuana markets under the status quo of federal prohibition.
The letter doesn’t specifically endorse the Secure and Fair Enforcement (SAFE) Banking Act—which is a major component of a debate playing out in a bicameral conference committee where lawmakers are seeking to attach the legislation’s language to a large-scale manufacturing bill. But it does say that the “lack of safe banking and financial services for the cannabis industry and for those indirectly involved in cannabis marketplaces has become a dire public safety issue.”
“Virtually all our member states and territories have been negatively impacted by the lack of available financial and banking services for cannabis businesses and those working with the cannabis industry,” it says.
The main problems that they identified concern public safety and security, the lack of access to banking and depository services and the need for small and minority businesses to access financial institutions.
As has been noted by several congressional proponents of reform and stakeholders, the banking dilemma has forced many marijuana businesses to operate on a largely cash-only basis that has made them unique targets of crime. The letter gives examples of recent violent and sometimes robberies that have taken place at retailers in a number of states in recent months.
“A lack of access to safe banking not only fuels these crimes (by increasing the perception that cannabis businesses carry large amounts of cash on-site), but significantly threatens the public safety of neighborhoods and communities nationwide,” they said. “In addition to decreasing these threats, access to traditional banking services would provide our regulatory agencies with greater insight into licensed operators and could help in efforts to prevent diversion and criminal enterprises.”
CANNRA said that while the difficulties that marijuana businesses face without being able to use traditional financial services has been well documented, it’s less known that the problem is also “impacting government agencies regulating cannabis.”
The organization cited an example out of Maryland where regulators had selected a “state vendor for electronic banking services,” only to have that vendor decline to service the state-legal medical cannabis industry, forcing them to seek out an alternative option that still only provided limited services, complicating the collection of licensing fees.
“Similarly, other state regulatory agencies have had to create workarounds to collect licensing fees from the businesses they regulate,” the letter says. “Even CANNRA—an organization comprised entirely of government officials—has faced challenges to acquiring financial services because we have ‘cannabis’ in our name.”
The new letter also says that the current problem is having a disparate impact on small and minority businesses, the regulators wrote.
“While larger operators have typically had the resources to identify and create alternatives for banking and financial transactions, small businesses have struggled and are often the entities left without access to capital and with cash-only operations, creating increased public safety risks,” they said. “This impacts the viability and success of small and minority cannabis businesses in this space.”
“For minority cannabis businesses, these issues can be compounded by historic and present discriminatory practices in banking and lending in general. As states continue to seek policy solutions to support small business, minority business, and women-owned business in the cannabis space, the lack of banking and financial resources and access to loans and capital remains a massive impediment and is further exacerbating disparities in the cannabis marketplace.”
The letter concludes by reiterating that the “lack of safe banking and financial services for the cannabis industry and for those indirectly involved in cannabis marketplaces has become a dire public safety issue.”
“In addition, it further exacerbates the uneven playing field that exists for small and minority cannabis businesses,” it says. “Cannabis regulators across states continue to strive for regulations that protect public health and consumer safety, promote equity, and promote regulatory certainty for industry operators. Access to safe banking is an integral part of our ability to accomplish these goals.”
“We urge congress to take these state realities to heart and to prioritize policy approaches that promote safe banking,” CANNRA said. The letter’s primary signatories were regulators serving in Georgia, Hawaii, Michigan, Minnesota, Nevada, Oregon and Washington.
Another group of marijuana regulators, Cannabis Regulators of Color Coalition, has separately weighed in on the cannabis banking conundrum, and argued in a Marijuana Moment op-ed that the SAFE Banking Act alone will not provide sufficient help for small businesses. The group says advocates should push to add provisions to the bill providing interim safeguards for Community Financial Depository Institutions (CFDIs) and Minority Depository Institutions (MDIs), as well as measures to prevent predatory lending and promote loan availability for people from disadvantaged communities.
Members of Congress have been hearing from a variety of banking associations, lawmakers and other stakeholders who want leaders to stop delaying the enactment of the SAFE Banking Act. And some are holding out hope that it will be included following bicameral negotiations on the manufacturing bill known as the America COMPETES Act.
Rep. Earl Blumenauer (D-OR), an appointed conferee on that legislation, recently said that he feels there “tremendous momentum” to get the marijuana banking job done through their negotiations.
“We’ve got a vehicle that needs to to be acted upon relatively soon. There’s broad support for it,” the Congressional Cannabis Caucus co-chair, who led a letter to leadership late last month that stressed the urgency of enacting the banking reform, said. “I think that there’s tremendous momentum.”
The conference committee held its first meeting on the America COMPETES Act last week, with multiple appointed conferees urging the body to attach the SAFE Banking Act language in the interest of economic competitiveness and public safety.
Rep. Maxine Waters (D-CA), who chairs the House Financial Services Committee and previously listed marijuana banking as a legislative priority ahead of the conference, said that the bipartisan nature of the reform proposal is “evident” based on the fact that the House included it in the chamber’s version of the manufacturing bill before it was removed in the Senate.
Additionally, nearly a quarter of all senators sent a bipartisan letter last week urging that cannabis banking be included in the final bill.
The third-highest-ranking Democratic member in the Senate, Sen. Patty Murray (D-WA), has taken special interest in marijuana banking reform, describing it as a priority of hers as an appointed member on the bicameral conference committee.
She said last week that she hopes “we can all come to an agreement to keep SAFE Banking in our final bill so that cannabis stores in states like mine do not have to operate entirely in cash.”
Blumenauer said on Monday that he believes that the conference could finalize its report within “the next couple of months” ahead of the summer recess, if not sooner.
Despite continually passing though the House, the Senate has been reluctant to advance the measure under Democratic and Republican control. Current Senate leadership has insisted on passing comprehensive legalization legislation first before the cannabis banking bill.
A top aide for Senate Majority Leader Chuck Schumer (D-NY), who is working to finalize his own legalization bill, recently tempered expectations about the prospects of moving marijuana banking through the America COMPETES Act.
Asked by Marijuana Moment whether there are any specific, equity-centered policies that he’s discussed adding to the SAFE Banking Act with Senate leadership, Blumenauer said that he’d “prefer not to go into” discussions he may have had with Senate colleagues, and he put the onus on the opposite chamber to propose any specific changes that would make the legislation more palatable to them.
“They have the opportunity to move something forward, and I welcome those efforts,” he said. “I’m perfectly willing to work with them as far as they can go as long as it doesn’t get in the way of solving this.”
The standalone Senate version of the SAFE Banking Act currently has 42 cosponsors, including nine Republicans.
That reluctance on the Senate side was also the subject of a letter that SAFE Banking Act sponsor Rep. Ed Perlmutter (D-CO) sent to leadership last month.
In a previous statement to Marijuana Moment, Perlmutter pointed out that “more than two-thirds of the conferees have already voted for or cosponsored the SAFE Banking Act.”
The congressman has even made a point to talk about enacting the reform legislation during committee hearings on ostensibly unrelated or wider-ranging legislation, like at a recent House Rules Committee hearing.
Despite recently saying that he’s “confident” that the Senate will take up his bill this session, Perlmutter recognized that while he’s supportive of revisions related to criminal justice reform, taxation, research and other issues, he knows that “as we expand this thing, then we start losing votes, particularly Republican votes and we got enough votes in the Senate to do it” as is.
Meanwhile, the governor, attorney general and other top officials in Washington State sent a letter to congressional leaders earlier this month, again emphasizing the urgent need to pass marijuana banking reform as a public safety imperative.
Separately, Washington State officials also recently held a virtual roundtable to address the spate of deadly robberies targeting marijuana retailers, with regulators reiterating their call for a federal policy change and discussing steps the state can take on its own while Congress fails to act.
Washington State’s treasurer has been especially vocal about the need for congressional reform, and he wrote in a recent letter to his colleagues in other states that it’s “just not safe to have this financial volume in cash.”
He made similar remarks at a recent conference of the National Association of State Treasurers (NAST). And Colorado Treasurer Dave Young echoed that sentiment in a recent interview with Marijuana Moment.
In the absence of congressional action, more states are moving to enact marijuana banking reform policies on their own. For example, Pennsylvania House lawmakers filed a companion bill to a Senate-passed measure late last month that would provide banking protections and tax relief for marijuana businesses.
Meanwhile, the number of banks that report working with marijuana businesses ticked up again near the end of 2021, according to recently released federal data.
It’s not clear if the increase is related to congressional moves to pass a bipartisan cannabis banking reform bill, but the figures from the Financial Crimes Enforcement Network (FinCEN) signal that financial institutions continue to feel more comfortable servicing businesses in state-legal markets.
Some Republicans are scratching their heads about how Democrats have so far failed to pass the modest banking reform with majorities in both chambers and control of the White House, too. For example, Rep. Rand Paul (R-KY) criticized his Democratic colleagues over the issue in December.
Read the new letter from the marijuana regulators on passing cannabis banking reform below: