A coalition of 38 state and U.S. territorial attorneys general, led by Colorado Attorney General Phil Weiser, sent a letter to Congress on May 8 urging them to pass legislation that would allow marijuana businesses to access the mainstream banking system.
The attorneys general summarized the issue thusly: “Thirty-three states and several U.S. territories have legalized the medical use of marijuana. However, because the federal government classifies marijuana as an illegal substance, banks providing services to state-licensed cannabis businesses and even to other companies which sell services and products to those businesses could find themselves subject to criminal and civil liability under the federal Controlled Substances Act and certain federal banking statutes.”
The attorneys general (yes, you’re reading that right, that is the plural form of attorney general. Don’t believe us? Just watch John Oliver’s Last Week Tonight episode on the subject.) write that the risk of liability has prohibited financial institutions from providing services to state-approved marijuana businesses. And, although sales in 2017 were estimated at $8.3 billion (and expected to jump to $25 billion by 2025), all that money has been handled outside the regulated banking system.
“Businesses are forced to operate on a cash basis,” the attorneys general wrote. “The resulting grey market makes it more difficult to track revenues for taxation and regulatory compliance purposes, contributes to a public safety threat as cash-intensive businesses are often targets for criminal activity, and prevents proper tracking of billions in finances across the nation.”
The letter clarifies that passage of such legislation wouldn’t be an endorsement of any state or territory’s specific handling of marijuana and legalization, just an acknowledgement that “the reality of the situation requires federal rules that permit a sensible banking regime for legal businesses.”
The attorneys general are requesting Congress advances the SAFE Banking Act, sponsored by Colorado Rep. Ed Perlmutter, or similar legislation that would protect banks that work with legally (according to the states) operating marijuana businesses.
“An effective safe harbor would bring billions of dollars into the banking sector, enabling law enforcement; federal, state and local tax agencies; and cannabis regulators in 33 states and several territories to more effectively monitor cannabis businesses and their transactions. Compliance with tax laws and requirements would be simpler and easier to enforce with the regulated tracking of funds in the banking system, resulting in higher tax revenues,” the letter read.