Marijuana Businesses Ask Congress To Grant Them Banking Services
The lack of legal banking services for marijuana-related businesses is creating unnecessary economic barriers and encouraging crime, the owner of a Washington, D.C. marijuana business told Congress this week.
A House Financial Services subcommittee called the hearing to determine whether federal law that bans banking services for marijuana businesses should be changed.
“There is still no federally-approved system for businesses to perform typical duties like pay salaries, service customers using credit or debit cards, access working capital loans, pay bills via check, etcetera,” Corey Barnette said in his congressional testimony.
Barnette is the owner of District Growers LLC marijuana cultivation center and the Metropolitan Wellness Center Inc. cannabis dispensary, both in Washington, D.C.
“The current system serves to create a public safety disaster, disadvantages small and minority-owned businesses, hassles both employees and service providers to the industry, makes tax collection overly burdensome, and serves to largely stifle the growth of the industry,” he said.
Washington, D.C. was one of the first jurisdictions to allow both medicinal and recreational use of marijuana. Washington, D.C., along with Maryland, Colorado, Washington state and Oregon, also allows retail sales of small amounts of the drug.
Possession or sale of marijuana remains a felony offense under federal law.
Several witnesses from among state economic agency and trade association officials said the federal government was out of step with state laws. There are 47 states that legalized some degree of marijuana use, mostly for medicinal purposes.
California State Treasurer Fiona Ma told Congress the marijuana industry would be worth at least $5.1 billion in her state by 2020.
Congress is considering legislation called the Secure and Fair Enforcement Banking Act of 2019, also known as the SAFE Banking Act, that would turn cannabis into more of a regular business. The hearing this week was the first in Congress to consider banking services for marijuana businesses.
The bill would prohibit federal banking regulators from penalizing financial institutions that deal with legitimate marijuana-related businesses. The businesses could then accept credit cards from customers, obtain lines of credit for loans and pay employees through bank accounts.
Federal law now forces businesses that sell marijuana to deal with cash transactions only, sometimes making them targets of armed robbers.
Neill Franklin, a former Maryland law enforcement officer and now executive director of the nonprofit Law Enforcement Action Partnership, said that “opportunities for cash robberies will increase” as more marijuana businesses open but must deal only in cash.
One example witnesses mentioned during the hearing was the case of Travis Mason, a security guard who was shot and killed during robbery attempt at a marijuana dispensary in Colorado on June 18, 2016. He was planning to become a police officer when he was killed by the two robbers.
Witnesses also warned that the marijuana businesses could be used to launder money from illegal activities if all their transactions are in cash.
The American Bankers Association said in a statement to the subcommittee that federal law is standing in the way of economic development in states that legalized marijuana.
However, Jonathan Talcott, chairman of the anti-marijuana legalization group Smart Approaches to Marijuana, said ingesting the drug can lead to psychosis, addiction and serious health problems.
“This is a public health issue, not a banking issue,” he said.
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