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U.S. House Of Representatives Approves Cannabis Banking Reform In Larger COVID-19 Relief Package

Lawmakers voted 208-199 (23 not voting) in favor of coronavirus “HEROES” relief package

DISTRICT OF COLUMBIA: On Friday evening (5/15/20) lawmakers in the United States House of Representatives passed additional coronavirus relief legislation to provide continued economic and government support to the country. The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act includes the language of the SAFE Banking Act, which would prevent federal financial regulators from punishing financial institutions that provide services to state-legal cannabis businesses.

Since the onset of the COVID-19 pandemic, cannabis businesses across the country have been deemed essential and continue to operate. However, many of these businesses still lack access to the same financial services that are granted to every other industry in the United States. Because it is possible that coronavirus can be transmitted on currency — placing private industry and government workers at risk when handling large amounts of cash — allowing the cannabis industry to access banking services is now more crucial than ever. This policy change would also ensure that small and minority-owned businesses can access the financial assistance designed for them in many state programs.

The HEROES Act, which includes provisions to allow banks and financial institutions to provide services to the cannabis industry without fear of criminal prosecution, will now head to the Senate for consideration. In September 2019, the House of Representatives voted in favor of the SAFE Banking Act, but the legislation has since stalled in the Senate.

Statement from Steve Hawkins, executive director at the Marijuana Policy Project:
“I’m encouraged that the House recognizes the urgency of this issue and has taken this strong and necessary position. We thank Chairwoman Maxine Waters and Rep. Ed Perlmutter for their leadership on the issue.

“Continuing to exclude the cannabis industry from accessing basic and essential financial services during this time will result in more harm than good. Not only will it make the country’s economic recovery that much harder, but the provisions intended to help minority-owned businesses would continue to be absent within the industry.”

Statement from Don Murphy, director of federal policies at the Marijuana Policy Project:
“In light of the public health and public safety benefits of this specific change in policy, the Senate has good reason to pass this language into law. This is a change in policy that the banks are asking for even more than the cannabis companies. We urge the Senate Banking Committee to adopt the SAFE Banking provisions to ensure financial institutions can provide basic banking services to businesses that are compliant with state law.”

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Cresco Labs Comments On The Passage Of The Safe Banking Act In The U.S. House Of Representatives

ILLINOIS:  Cresco Labs, one of the largest vertically integrated multi-state cannabis operators in the United States, today provided comments on the passage of the Secure and Fair Enforcement Banking Act of 2019 (“SAFE Banking Act.”)

“The passage of the SAFE Banking Act by the U.S. House of Representatives represents a significant first step in the effort to provide stability and security to the multibillion-dollar cannabis industry,” said Cresco Labs CEO and Co-founder Charlie Bachtell.

“By allowing cannabis companies to access commercial banking services and end their reliance on cash, the SAFE Banking Act would facilitate a safer operating environment for all stakeholders. We continue to see extremely encouraging progress made from a legislative standpoint at both the federal and state levels that is contributing to the normalization of the cannabis industry. The passage of the SAFE Banking Act will also provide access to banking and capital to fuel diversity and make the cannabis industry more inclusive for everyone. The bipartisan support shown in passing the SAFE Banking Act through the House demonstrates the clear merits of this legislation, and we look forward to similar support being shown as the bill moves to the Senate.”

House Financial Services Committee Passes SAFE Banking Act

DISTRICT OF COLUMBIA: Today, the House Financial Services Committee voted 45 to 15 to pass H.R. 1595, the Secure and Fair Enforcement (SAFE) Banking Act of 2019. Authored by U.S. Reps. Ed Perlmutter (D-CO-07) and Denny Heck (D-WA-10) and cosponsored by Reps. Warren Davidson (R-OH-08) and Steve Stivers (R-OH-15). The bill allows marijuana-related businesses in states with existing regulatory structures to access the banking system.

Today, voters in 47 states plus the District of Columbia – 97.7 percent of the population – have legalized some form of adult recreational and medical marijuana, including cannabidiol. Today’s vote marks a significant milestone considering Congress has failed to act on this issue since similar legislation was first introduced in 2013.

Cannabis is currently considered illegal under the federal Controlled Substances Act therefore financial institutions providing banking services to legitimate and licensed marijuana businesses are subject to criminal prosecution. Since state and federal law are not aligned on the issue, legal and legitimate businesses are forced to operate on a cash-only basis creating a serious public safety risk for employees, businesses and communities, as well as providing an opportunity for tax evasion, money laundering and other white-collar crimes. The SAFE Banking Act is seen as the first of many cannabis reform measures.

With 152 cosponsors at the time of the committee vote – over a third of the entire House – the bill will next move to the floor of the House. A Senate companion bill is also expected to be introduced in the coming weeks. The bill’s sponsors applauded the committee vote and reiterated the need to continue to advance the legislation.

“The SAFE Banking Act is about public safety, accountability and respecting states’ rights. Our federal banking laws were designed to prevent illicit activity and help law enforcement do their jobs. These laws need to be applied to legitimate marijuana businesses and employees in order to improve transparency and accountability and help root out illegal transactions. Most importantly, the SAFE Banking Act will get cash off our streets, reducing the risk of violent crime and making our communities safer,” said Perlmutter. “While Congress has stuck its head in the sand for many years, this Committee has shown leadership on this issue and I want to thank my cosponsors and members of the Committee for their support.”

“With this vote, the Financial Services Committee took a stand for public safety and transparency. The SAFE Banking Act will enhance public safety by giving those operating legitimate marijuana establishments access to banking services available to other industries,” said Heck. “These businesses will no longer need to deal exclusively in cash. The SAFE Banking Act will help ensure the fair treatment of those who work for or do business with a legitimate marijuana business. Finally, the SAFE Banking Act will make the marijuana industry more transparent and accountable by ensuring compliance with current regulations and norms.”

“Today’s markup allowed for input from both sides of the aisle that ultimately made the SAFE Banking Act a stronger bill, including my amendment to give safe harbor to insurers, and I look forward to working with Representative Perlmutter to continue improving it as it moves through the legislative process,” Stivers said. “This isn’t a bill about condoning marijuana use, it’s about ensuring businesses are not forced to operate in cash and open themselves up to risk, and I believe the improvements made today reflect that goal.  Again, I want to thank Mr. Perlmutter, as well as Mr. Heck and Mr. Davidson for their leadership on this issue.”

“Government regulators have deemed cannabis business owners to have certain reputational risks. From a civil liberties standpoint, we need to move away from this. Allowing these businesses access to the safety of our American financial institutions minimizes risk for owners and enhances our national security. I thank my colleagues for their work on this critical legislation,” said Davidson.

A draft version of the SAFE Banking Act was discussed during the first-ever congressional hearing about cannabis banking on February 13, 2019. Compared to previous iterations of the bill, the SAFE Banking Act of 2019 adds protection for ancillary businesses like real estate owners, accountants, and other vendors from money laundering and other laws as well as adjusts the tribal language and the definition of “cannabis-related legitimate business.” The final version of H.R. 1595 voted on in Committee also includes two provisions aimed at expanding access to financial services for minority-owned and women-owned cannabis-related businesses.

H.R. 1595 has the support of the American Bankers Association, Credit Union National Association, Independent Community Bankers of America, the Electronic Transactions Association, the National Cannabis Industry Association, Mid-Size Bank Coalition of America, The Real Estate Roundtable, and various U.S. trade associations such as American Land Title and American Property Casualty Insurance Association, among others.

Cashing In On Cannabis: CannaCon’s Banking Panel

By Sahar Ayinehsazian

Since Washington state legalized recreational marijuana in 2014, recreational cannabis sales have totaled over $1 billion, translating to more than $250 million collected in new taxes. Such substantial sales, however, have also brought problems for licensees in the form of cash.

Because of marijuana’s federal status as a Schedule I substance, financial institutions continue to deny banking services to state licensed marijuana businesses. Consequently, these businesses have been forced to deal in cash and suffer the sometimes lethal consequences.

There are, however, licensed marijuana businesses who have broken free from cash with the help of third party platforms like PayQwick. Licensed marijuana businesses can now easily access regular businesses bank accounts, cash management and bill pay services and the ability to send and receive electronic payments. These businesses also enjoy the added benefit of compliance services, which keep them operating in line with all of the state’s regulations.

To learn how to break free from cash, marijuana business owners and those considering the marijuana industry can attend CannaCon’s banking panel, Cashing In On Cannabis – Compliance, Banking and Cash Management” on Friday, February 17, 2017 at 11:30 am in seminar room two. Moderated by MJBA CEO and Co-Founder David Rheins, the panel features industry experts Kenneth Berke, Christine Masse, John Vardaman and Myles Khan.

Ken Berke is the Co-Founder and CEO of PayQwick, a compliance, cash management and electronic payment processing platform that has facilitated regular business bank accounts for over 200 licensed marijuana businesses throughout Washington. He is also an attorney with 29 years of experience and has advocated for the legal marijuana industry before regulators throughout the U.S.

Christine Masse is a partner at Miller Nash Graham & Dunn, where she leads the government and regulatory affairs practice group and specializes in representing businesses in highly regulated industries with their transactional, regulatory, and public policy needs. She also leads the firm’s tribal team, providing counsel to various Northwest Native American tribes and organizations on matters such as marijuana.

Myles Harlow Kahn is a legal officer at Foundry Law. His practice focuses on corporate, entertainment, intellectual property, business development, cannabis and regulatory matters. He is also the owner of Buddy’s in Renton, one of Washington’s most prominent marijuana retailers.

John Vardaman is Executive Vice President & General Counsel of Hypur, makers of technology enabling financial institutions to service cash-intensive businesses in accordance with legal compliance requirements. He helped author the Cole Memorandum, the DOJ document outlining how financial institutions can bank marijuana businesses in states where cannabis has been legalized.

Mounting Support for Marijuana Banking Has Widespread Implications

DISTRICT OF COLUMBIA: Although 28 states have already legalized marijuana for medicinal or recreational use, the U.S. Drug Enforcement Administration (DEA) continues to label marijuana a Schedule 1 substance, along with heroin and LSD, making it illegal on a federal level. As a result, the banking industry has been slow to provide services to marijuana businesses, forcing many of these companies to operate on a cash-only basis.

Cash transaction businesses are a tempting target for thieves, and the lack of oversight at times leads to lost tax revenue. It’s a situation that Senator Elizabeth Warren, a member of the Senate Banking Committee, is anxious to change. As the Associated Press initially reported, Warren and nine other senators have called upon the Financial Crimes Enforcement Network to issue new and stronger guidance allowing banks to provide services to marijuana shop vendors. The moves are a significant encouragement to payment processors supporting the cannabis industry, as well as other industry players.

One of the supporters is Singlepoint, Inc. (OTC: SING), a mobile technology and payments provider, which, through its “SingleSeed” Payments subsidiary, provides payment solutions for the cannabis industry. Its mobile marketing and payment solutions include cashless ATM, Pay-by-Text™ and text message marketing. The company is strongly encouraged by the efforts of Senator Warren and others on Capitol Hill, and the significant positive changes they could bring.

Previous guidance efforts by the U.S. Department of the Treasury gave banks only limited permission to work with legal marijuana businesses. Along with the DEA’s Schedule 1 listing, it has created a significant gap between state and federal treatment of marijuana. Even though the number of financial institutions willing to provide services to marijuana businesses has grown significantly in recent years, only a small percentage currently serve the industry. It’s still an area dominated by small state-chartered banks and credit unions.

Supporters however see an inevitable day, through efforts such as those now being led by Senator Warren, when large national banks like Wells Fargo offer comprehensive services to the cannabis industry, further spurring already rapid industry growth.

CannaScore Wins Banking Appeal – Has Account Fully Restored

COLORADO: CannaScore announced it is has been successful in its appeal, and its banking privileges have been restored. As reported here on MJ News Network last month, the company had certain banking privileges revoked when its financial services provider discovered the company was providing services to the marijuana industry. During the appeal, the company offered its products free of charge.

“Although we have full banking access again, we are still giving all customers a free trial of our award-winning cloud-based software,” said Thomas Smith, Managing Partner.

The CannaScore system audits compliance with a wide range of regulations governing the cannabis industry, including licensing, security, personnel safety, food handling, pesticides, and chemical exposure.

Legal cannabis growers, producer/processors, and retailers can use the system to identify areas of non-compliance before problems occur, and provide assurance that they are adhering to the myriad of state and local regulations. Failure to comply with regulations can often result in fines, shutdowns, license revocation and even prison.

Additionally, banks, insurance firms, accountants and real estate developers can use CannaScore as a tool to ensure that their clients operating in the cannabis sector are in compliance as mandated in the Cole Memo and finCEN Guidance.

CannaScore is easy to use, and quickly analyzes compliance that exceeds state parameters. The system also produces a score, which is useful for anyone in the cannabis industry, including consumers, to quickly evaluate the quality of an organization.

“Companies that score high may be more likely to attract funding, obtain favorable rates, demonstrate reliability to landlords, and even attract new customers,” Smith said.

Banking On The Marijuana Industry?

OREGON: It is legal to sell marijuana in 23 states. But pot businesses can’t deposit their money in banks because of federal banking laws. While the dilemma has been a back-burner issue in Congress for several years, a solution may be in the works.

A provision in the upcoming financial services spending bill would prevent the federal government from spending money on penalizing financial institutions that accept legal marijuana businesses as clients. That would greatly reduce the ability of federal agencies’ to prosecute the banks.

Increased access to banking would, in turn, decrease the currently cash-only businesses’ risk of robbery by allowing customers to pay with debit and credit cards, reduce the likelihood that the business could be used as a money-laundering front and solve the nightmare of trying to pay taxes with cash

“Forcing businessmen and businesswomen who are operating legally under Oregon state law to shuttle around gym bags full of cash is an invitation to crime and malfeasance,” said Sen. Jeff Merkley, D-Ore. “It’s time to let banks serve these legal businesses without fearing devastating reprisals from the federal government.”

Rand Paul Backs Effort To Bring Banking To Legal Marijuana Businesses

DISTRICT OF COLUMBIA:  Less than a month after holding a fundraiser on the sidelines of a Colorado marijuana conference, Sen. Rand Paul, R-Ky., is joining the fight to give America’s growing legal marijuana industry access to banking services.

Paul, the first major-party presidential candidate to publicly seek support from legal marijuana industry, is among the bipartisan co-sponsors of the Marijuana Businesses Access to Banking Act of 2015, introduced Thursday in the Senate.

Similar legislation has already been re-introduced in the House after a previous effort to ease access to banking for marijuana companies failed. 

The Senate bill would prohibit banking regulators from penalizing or discouraging banks from providing financial services to marijuana businesses operating in areas of the U.S. where marijuana has been legalized.

 

Bipartisan Marijuana Banking Bill Introduced In The Senate

DISTRICT OF COLUMBIA: Reflecting growing public support for changing the nation’s drug laws, a bipartisan group of senators on Thursday introduced the chamber’s first bill that would legalize banking for recreational marijuana companies.

Introduced by the Senate delegations from Oregon and Colorado, two of the first states to legalize recreational marijuana, the bill would prohibit the federal government from penalizing banks that work with marijuana businesses.

Though four states and the District of Columbia have legalized marijuana, the drug is still illegal under federal law. That makes it difficult for businesses operating in those legalized states to access financial services through the banking industry. Instead, those companies have to run all-cash operations that the senators say invites crime.

I-502 Compliant Banking & Merchant Services Is Monday, June 29th In Bellevue, WA

WASHINGTON: If you have anything to do with banking or merchant services for Washington’s legal cannabis industry, you’ll want to make sure to attend the Marijuana Business Association’s Professional Education Seminar on I-502 Compliant Banking & Merchant ServicesMonday, June 29th, 2015 1:00-4:30PM a the Red Lion Hotel, 11211 Main St. Bellevue, WA 98004. Featuring an impressive lineup of the state’s leading authorities on cannabis industry banking and finances, the event was organized by the MJBA at the behest of state’s I-502 Licensees and applicant, MJBA members and other cannabis industry service providers. The half day seminar will feature presentations and panel participation from:

  • Washington State Department of Financial Institutions Director of Banking, Rick Riccobono;
  • Timberland Bank COO, Jonathan Fischer
  • Washington Liquor and Cannabis Board CFO, Mike Kashmar
  • Legal Officer at Foundry Law Group and I-502 Retail Licensee Myles Kahn
  • PayQwick CEO Ken Berke and CFO Keith Marks
  • President & Executive Director of the Community Bankers of Washington, Mark MacDonald
  • Moderation, David Rheins, Executive Director of the Marijuana Business Association

Foundry Law Group will sponsor a post-event reception at the hotel bar at the conclusion of the seminar.