Issue: Although 47 states have legalized some form of medical or recreational
marijuana, most Congressional Republicans remain opposed to relaxing
Federal law. Yesterday, the House Financial Services Subcommittee on
Consumer Protection & Financial Institutions held a hearing entitled
“Challenges and Solutions: Access to Banking Services for Cannabis-Related
Businesses.” The hearing examined a bill sponsored by Rep. Ed Perlmutter (DCO), which would allow cannabis-related businesses access to financial
services and exempt them from Federal prosecution for providing services legal
under state law.
Impact: Despite Reps. Steve Stivers (R-OH) and Warren Davidson (R-OH)
cosponsoring the bill, other GOP members of the Subcommittee state varying
degrees of opposition to the legislation.
Rep. Blaine Luetkemeyer (R-MO), the Ranking Member of the Subcommittee,
argues that providing a safe harbor for financial institutions before dealing with
the question of whether marijuana should be de-scheduled is putting the “cart
before the horse.” He also argues that Democrats are being hypocritical for
supporting “Operation Choke Point,” a 2013 Department of Justice (DoJ)
initiative to investigate banks doing business with legal businesses including
firearm dealers, payday lenders, and other sectors believed to be at risk for
fraud and money laundering, while advocating for banks to open their doors to
businesses dealing with a controlled substance illegal under Federal law. Rep.
Scott Tipton (R-CO) expressed his concern that the legislation could lead to
drug cartels comingling illicit funds with legitimate funds. Even bill sponsor Rep.
Stivers made it clear that his support of the bill is based on the dangers of
businesses storing large quantities of cash, rather than his general support for
However, House Financial Services Committee Ranking Member Patrick
McHenry (R-NC) seemed to lay out a path to broad bipartisan support for the
bill. McHenry is pushing for broader Bank Secrecy Act reform related to
suspicious activity report filings while advocating additional input from law
Next Steps: While the bill has the requisite support to pass the House with
limited bipartisan support, and President Trump has signaled a willingness to
sign such a bill, the Senate remains the major hurdle. Even as Senate Majority
Leader Mitch McConnell (R-KY) pushed to legalize industrial hemp in the Farm
Bill, he has been blunt on cannabis, calling it hemp’s “illicit cousin which I
choose not to embrace.” McConnell is unlikely to bring any cannabis-related
legislation to the Senate floor that would divide the GOP conference.
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The lack of regulatory clarity has caused many financial institutions to refrain
from serving cannabis-related businesses, cutting off their access to banking
services. Even companies involved in ancillary products and services have
been removed from payments platforms, including Square and PayPal.
Because these businesses must often hold cash rather than deposit it, they are
often the target for robbery.
Under existing anti-money laundering (AML) requirements, financial institutions
are required to aid investigations into violations of Federal law through
measures including suspicious activity report (SAR) filings with the Financial
Crimes Enforcement Network (FinCEN), including cannabis businesses duly
licensed under state law.
Notably, the Independent Community Bankers of America (ICBA) and the
Credit Union National Association (CUNA) are voicing their support for the
The witness panel included:
- The Honorable Fiona Ma, California State Treasurer
- Maj. Neill Franklin (Ret.), Baltimore City & Maryland State Police
Departments, and Executive Director, Law Enforcement Action
- Ms. Rachel Pross, Chief Risk Officer, Maps Credit Union, on behalf of
Credit Union National Association (CUNA)
- Mr. Gregory S. Deckard, President, CEO and Chairman, State Bank
Northwest, on behalf of Independent Community Bankers of America
- Mr. Corey Barnette, Owner, District Growers Cultivation Center &
Metropolitan Wellness Center
- Jonathan Talcott, Smart Approaches to Marijuana
All witnesses with the exception of Talcott supported Perlmutter’s bill, although
under committee rules, the minority party is only allowed to call 1 witness
absent agreement from the majority. Talcott echoed Republican arguments that
the underlying issue of the scheduling of marijuana must be addressed before
dealing with banking issues. He also warned of health issues related to
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