Weed Feed: Attorneys General From 17 States, Including California, Urge Congressional Leaders to Legalize Banking for Pot Industry

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WEED FEED / John Ross Ferrara / Monday, Jan. 22, 2018 @ 8:45 a.m.

Weed Feed: Attorneys General From 17 States, Including California, Urge Congressional Leaders to Legalize Banking for Pot Industry

The attorneys general in left-to-right right order as their signatures appear on the letter | Photos form Wikimedia and various government websites.

Attorneys General from 17 States, D.C. and the U.S. province of Guam sent a letter to congressional leaders last week calling for legislation that would legalize banking for cannabis companies operating in states where the drug is sold legally.

Twenty-nine states and several U.S. territories have legalized the medical use of marijuana. Among those, eight states and the District of Columbia, also allow recreational use by adults over 21 years of age. However, because the federal government classifies marijuana as an illegal substance, banks providing services to state-licensed cannabis businesses could find themselves subject to criminal and civil liability under the Controlled Substances Act and certain federal banking statutes. This risk has significantly inhibited the willingness of financial institutions to provide services to these businesses.

The letter goes on to address the the issues facing these states and their businesses, as profits from the marijuana industry soar.

Despite the contradictions between federal and state law, the marijuana industry continues to grow rapidly. Industry analysts report that sales grew by 30% to $6.7 billion in 2016 and expect those totals to exceed $20 billion by 2021. Yet those revenues often exist outside of the regulated banking space. Businesses are forced to operate on a cash basis. The grey market makes it more difficult to track revenues for taxation purposes, contributes to a public safety threat as cash intensive businesses are often targets for criminal activity, and prevents proper tracking of large swaths of finances across the nation.

The letter, also signed by Calif. Attorney General Xavier Becerra, proposes that congress should pass legislation that would provide a “safe harbor” for financial institutions that choose to accept money made by the marijuana industry.

To address these challenges, we are requesting legislation that would provide a safe harbor for depository institutions that provide a financial product or service to a covered business in a state that has implemented laws and regulations that ensure accountability in the marijuana industry such as the SAFE Banking Act (S. 1152 and H.R. 2215) or similar legislation. This would bring billions of dollars into the banking sector, and give law enforcement the ability to monitor these transactions. Moreover, compliance with tax requirements would be simpler and easier to enforce with a better-defined tracking of funds. This would, in turn, result in higher tax revenue.”

Meanwhile, U.S. Attorney General Jeff Sessions has been leading his own mini-crusade against marijuana despite President Trump’s campaign promise to protect states’ rights to legalize the drug. Earlier this month, Session rescinded the Cole Memo, an Obama-era policy directive telling federal prosecutors to lay off states that have legalized marijuana use.

Sessions also faces a lawsuit filed by 12-year-old Alexis Bortel, who uses cannabis to treat her epileptic seizures. Newsweek reports that the case will reach the New York City federal courthouse on February 14.

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The Weed Feed is a weekly column written by John Ross Ferrara.

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