Issue: Today, speaking at a press roundtable, Comptroller of the Currency
Joseph Otting expressed his hope that clarity for banks on how to serve
marijuana-related businesses would be forthcoming from Congress.
Impact: According to Otting, “Congress is going to have to act at the national
level to legalize marijuana if they want those entities involved in that business to
utilize the U.S. banking system…If I’m a betting person, I’m like 25-30 percent
maybe next year (sic.), but I would hope by 2020 we can get this issue
Next Steps: Otting may be at once too optimistic and too pessimistic. In the
Senate, broad marijuana legalization falls within the jurisdiction of the Senate
Judiciary Committee, whose chairman Lindsey Graham (R-SC) opposes
marijuana for recreational use, although to the surprise of some of his
colleagues, Graham has been open to rescheduling marijuana under The
Controlled Substances Act to lower penalties for its possession. Graham has
also expressed a willingness to consider legalizing marijuana for some medical
purposes. It is doubtful, however, that the votes exist on the Committee or in
the broader Senate for full marijuana legalization.
Otting may be wrong, however, to suggest that marijuana need be broadly legal
at the Federal level for relief to be afforded to the banking sector. The Senate
Banking Committee could conceivably advance legislation to provide limited
regulatory relief for financial institutions in those states which have legalized
marijuana in some form. That too, though, appears doubtful given the
composition of the Banking Committee: like the Senate Judiciary Committee,
few sit on either panel from states where marijuana has been legalized—
especially in broad form.
More information, below:
Most efforts at broadening the legal uses of marijuana have come from state
ballot initiatives, not from lawmakers. To date, Vermont is the only state among
the 10 which have legalized recreational marijuana use where lawmakers
approved the change in the law rather than voters.
Currently, marijuana businesses can bank with Federally-chartered banks, but
every transaction requires the filing of a suspicious activity report.
Should he be confirmed, former George H.W. Bush-era Attorney General
William Barr, President Trump’s nominee to serve in that position again, has
expressed his intent to provide forbearance on prosecuting transactions legal at
state law. That, however, is likely insufficient to provide enough regulatory
certainty for many financial institutions. Barr’s position echoes that of
Department of Justice (DoJ) guidance under President Obama, guidance which
former Trump Attorney General Jeff Sessions rescinded.
Please contact ACG Analytics for more information.