Will The Murky Marijuana Banking Picture Finally Get Clearer?
Federal Reserve Chairman Jerome Powell, while testifying before Congress yesterday, Tuesday, February 26, 2019, explicitly acknowledged the uncertainty and tension surrounding the access of a company engaged in marijuana or marijuana-related business to banking because of conflicting state and federal laws. When asked about the topic, the Chairman said, “I think it would be great to have clarity,” adding, “Financial institutions and their regulators and supervisors are in a difficult position with marijuana being illegal under federal law and legal under some state laws.”
Further, last week, the House Financial Services Committee made history by holding its first ever hearing on marijuana and financial services. Up for discussion at that hearing was a new draft of the Secure and Fair Enforcement (SAFE) Banking Act. Last year, Congress introduced the SAFE Act of 2017, which stalled and went nowhere. Colorado Rep. Ed Perlmutter, a prime sponsor of the bill, has been introducing a version of this bill for almost six years, but has failed to get a hearing until now. This year, not only is the bill going to be discussed, but the bill is even more robust, specifically adding protections for ancillary businesses providing products and services to marijuana-related businesses.
As Treasury Secretary Steven Mnuchin made clear while testifying before Congress last year, he too would like to see marijuana businesses able to access banking services. “I assure you that we don’t want bags of cash,” he said before a House Committee last year. “We want to find a solution to make sure that the businesses that have large access to cash have a way to get them into a depository institution for it to be safe.”
Today, while 10 states and the district of Columbia have legalized recreational marijuana, marijuana remains illegal on the federal level, listed as a Schedule 1 drug, along with heroin and LSD. And, while an increasing number of financial institutions are willing to bank marijuana and marijuana-related businesses, there still is a predominant, industry-wide reluctance to get involved, whether because of the added compliance that is required, or because of the unclear restrictions that are promulgated, by the Department of the Treasury.