Elizabeth Warren and other Senators are hoping a letter to the Financial Crimes Enforcement Network will help open banking access to cannabis businesses operating legally.
Along with nine other Senators, Massachusetts Democrat Elizabeth Warren recently submitted a letter to the Financial Crimes Enforcement Network, urging it to stop going after banks that provide services to cannabis-related businesses in states where marijuana is legal.
In the letter to the agency, Warren and the other Senators wrote: “Most banks and credit unions have either closed accounts or simply refused to offer services to indirect and ancillary businesses that service the marijuana industry. A large number of professionals have been unable to access the financial system because they are doing business with marijuana growers and dispensaries.”
Federally, marijuana continues to be classified as a Schedule I substance. Fearing persecution from the US Treasury and Justice departments for transporting and transmitting funds derived from the distribution of marijuana, nearly all banks and other financial institutions have continued to refuse to provide accounts, issue credit, or offer loans to businesses in the legal cannabis industry.
Without financial service, cannabis-related businesses are unable to accept credit card purchases, provide direct deposit for employees, or send tax payments electronically. They are forced to function as cash-only operations.
Despite that 28 US states have legalized medical or recreational marijuana, cannabis-related businesses operating in a legal industry have historically been unable to get financial service. Two years ago the US Department of Treasury did give banks permission to do businesses with legal marijuana entities under conditions, and since then the number of financial institutions willing to service those in the cannabis industry rose from 51 to 301. Still, less than 3 percent of cannabis businesses nationwide have been able to acquire banking service.
“To be clear, these legitimate, indirect businesses have been unable to open checking accounts and accept credit cards or checks,” the letter reads. “In some cases they also have lost access to existing accounts, such as retirement accounts, and have been forced to pay their employees, taxes, and bills in cash. Locking lawyers, landlords, plumbers, electricians, security companies, and the like out of the nation’s banking and finance systems serves no one’s interest.”
In Oregon, where both medical and recreational marijuana is legal, 87 percent of people favor its financial institution working with marijuana businesses, with an overwhelming majority believing them doing so would prevent crime and help the local economy. By operating as cash-only, cannabis businesses are more likely to have inaccurate tax reports.
Warren is a member of the Senate Banking Committee, which has jurisdiction over matters related to financial institutions, commerce, international trade and retail credit interest rates and corporations.
“[By providing banking service], you make sure that people are really paying their taxes. You know that the money is not being diverted to some kind of criminal enterprise,” Warren recently said. “And it’s just a plain old safety issue. You don’t want people walking in with guns and masks and saying, ‘Give me all your cash.”
Access to banking remains a top concern for the legal marijuana industry, according to the deputy director of the National Cannabis Industry Association, Taylor West.
“What the industry needs is a sustainable solution that services the entire industry instead of tinkering around the edges,” Taylor said. “You don’t have to be fully in favor of legalized marijuana to know that it helps no one to force these businesses outside the banking system.”
Last July, Congress refused an appropriations bill that would have protected banks that service the legal cannabis industry.
You can read the letter to the Financial Crimes Enforcement Network from Warren and the nine other senators, here.
Keep up with the latest developments in the cannabis industry by regularly visiting our news feed.
This article may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-looking statements by definition involve risks, uncertainties.
Source: Medical Marijuana Inc