A bipartisanal group of state attorney generals have urged Congress to allow cannabusinesses in legal adult-use and medical cannabis states access to banking systems.
As cannabis is still legally considered a Schedule I substance under the Controlled Substances Act, banks providing financial services to cannabusinesses are at risk from federal prosecution. This has led to financial institutions rejecting these merchants, even if they are operating legally within state law.
The situation creates all sorts of headaches for customers and businesses alike and means many transactions are cash-only. Given the growing demand and cost of cannabis products, large amounts of cash may be held on-site in vaults – a significant security risk. There’s also a security risk for customers too who may be carrying significant sums of money to purchase medicines.
Marijuana industry annual sales are expected to grow to exceed $20 billion by 2021. Even a small fraction is a huge amount of cash to have laying around in vaults.
Back in late 2015, we reported around 60% of U.S cannabis companies didn’t have bank accounts for their businesses as a result of the situation.
19 Attorney Generals have put their names to a letter stating the situation must change – and soon.
“Our banking system must be flexible enough to address the needs of businesses in the various states, while protecting the interests of the federal government,” states part of the letter. “This includes a banking system for marijuana-related businesses that is both responsive and effective in meeting the demands of our economy.”
One of the AG’s to sign was California Attorney General Xavier Becerra.
“This is an issue that is impacting both red and blue states,” stated AG Becerra. “Congress has the power to protect a growing $6.7 billion industry and the public safety of our communities.”
Currently, 29 states and several U.S. territories have legalized medical cannabis and eight states among that number along with the District of Columbia allow adult (recreational) use.
Oregon Attorney General Ellen Rosenblum says businesses have been forced to hide in the “dark shadows” of the banking system for too long.
“It is both dangerous and short-sighted to inhibit banks from accepting money from law-abiding businesses in states with legal medical or recreational marijuana,” said AG Rosenblum.
The situation has increased in urgency after the recent rescinding of guidance that enabled states to find ways for banks to provide in-state authorised businesses with financial services. This could also potentially affect Hawaii’s recent adoption of a cashless system for medical cannabis related services.
The letter to Congress can be viewed here (PDF).
