Governors Call on Congress to Pass Cannabis Banking Act

WASHINGTON — A bipartisan delegation of governors is urging Congress to pass legislation that would allow banks and credit unions to provide services to licensed cannabis dispensaries. 

The governors of 20 states and the U.S. Virgin Islands circulated a letter on Monday to congressional leaders in support of the Secure and Fair Enforcement Banking Act of 2021. The bill has received bipartisan support in both chambers of Congress, with 168 cosponsors in the House and 32 cosponsors in the Senate already signed on in its support.

Despite the repeated state-wide legalization of both medicinal and recreational cannabis products, financial institutions still face legal liability for the products under the Controlled Substances Act. Consequently, legal cannabis dispensaries largely operate on a cash-only basis with their customers. 

Rep. Ed Perlmutter, D-Colo., authored the House version of the bill while Sen. Jeff Merkley, D-Ore., authored the Senate version. Each bill has received a committee assignment, but both await a hearing.

“Michiganders voted overwhelmingly to legalize the use of recreational marijuana in 2018, and we must respect the will of the voters,” Michigan Gov. Gretchen Whitmer said in a written statement. “Although legalization continues rolling on nationwide, we still have federal laws on the books that prohibit financial institutions from working with marijuana businesses legally under state law.” 

Whitmer continued, “To be blunt, legalization is great for the economy: it creates jobs and boosts tax revenue that can go towards our schools, communities, and first responders. This legislation ensures that Michigan’s marijuana businesses can grow and access the same resources that all legal businesses can.” 

The SAFE Banking Act of 2021 would prohibit federal banking regulators from discouraging depository institutions from providing financial services to a business entity solely because it is cannabis-related, among other provisions. The bill would also prohibit financial institutions from withholding services to hemp-related business entities based solely on the business’s products. 

Cannabis is available for medical usage in 36 states, and recreational usage is legal in 18 states and the District of Columbia. In their letter to Congress, the governors contend the “cash-only environment” of cannabis businesses burdens tax collecting agencies and adds unwarranted additional expenses to consumers. 

“State and federal governments have a shared interest in upholding the rule of law, protecting public safety, and transitioning markets out of the shadows and into our transparent and regulated banking system,” the text of the governors’ letter read. “Many of our states have implemented laws and regulations to reduce these risks while ensuring financial accountability of the cannabis industry.” 

The letter continued, “These public safety risks can be further mitigated on the federal level by passing the SAFE Banking Act to provide state-licensed cannabis businesses with access to banking service providers. We urge you to pass the SAFE Banking Act of 2021 or similar legislation that would provide a safe harbor for depository institutions that provide a financial product or service to a state-licensed cannabis business in states that have legalized cannabis. We look forward to working with you as legislation progresses to address this urgent public policy and safety concern.”