WASHINGTON — Advocates for the marijuana industry fanned out across Capitol Hill on Thursday, urging lawmakers to make it easier for pot businesses to be bank customers.
Twenty-four states and the District of Columbia have legalized marijuana in some form, and the industry produces billions of dollars in revenue, but dispensaries and associated business struggle to gain access to the financial system because of the mismatch between federal and state statutes. Marijuana is illegal under U.S. drug laws, giving regulators pause as to whether banks may provide services to pot businesses.
"I have personally witnessed the difficulty that companies have in finding a banking partner," Julie Prom, an independent consultant who works with cannabis businesses in New York and Illinois, said during a press conference sponsored by the National Cannabis Industry Association.
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Hypur, a startup seeking to help banks serve businesses deemed high compliance risks (e.g. marijuana), has recruited a former Department of Justice lawyer to help build credibility. Its signature product: a payments platform to replace cash transactions.
April 25 -
The agency is now using Fincen guidance that was designed to make banks and credit unions more comfortable with the pot industry's risks. Such actions are encouraging more banks but still not many to do business with this emerging industry.
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A federal judge is urging the parties of a closely watched pot-banking case to settle their dispute.
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In a speech Tuesday, the director of the Financial Crimes Enforcement Network will argue that recent guidance for banks regarding the marijuana industry is working as intended. But it's unclear whether banks' concerns about the risks have been addressed.
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"I have also witnessed companies who have lost their bank" because financial institutions fear their regulators will take a dim view of such customers, she said.
The NCIA's executive director, Aaron Smith, said the group was sending 150 members from nearly 20 states to 200 congressional offices to share its message.
Rep. Denny Heck, a Democrat whose home state of Washington has legalized recreational marijuana, participated in the press conference and said afterward: "We are close to a tipping point, and it has already been evident" on Capitol Hill where certain marijuana measures have been well received.
"We do get majority votes when we do find narrow opportunities to add amendments," Heck told American Banker.
Heck and Rep. Ed Perlmutter, D-Colo., belong to the House Financial Services Committee and have introduced legislation that would give banks and credit unions "legal clearance" to provide services to legitimate marijuana businesses. However, committee Chairman Jeb Hensarling has been unwilling to advance the legislation.
"We are waiting for a signal from Chairman Hensarling that he would be willing to hear it," Heck said. "He hasn't been willing to thus far. In the absence of that we will look for every vehicle opportunity to amend it onto" another bill.
Some banks and credit unions are providing the services, "but before more will, they want increased clarity" from the federal government, Heck said.
The lack of banking services is a critical public safety concern in states where businesses are forced to operate strictly in cash.
"We are in a safe neighborhood, but everyone knows we are a cash business, and we don't have proper access to merchant services," said Aaron Justis, president and chief executive of the California medical marijuana company Buds & Roses. "I also worry about whoever has to make the drops at the bank. Is Congress going to wait until someone gets killed?"
Other members of Congress including Reps. Earl Blumenauer, D-Ore., Jared Polis, D-Colo., and Perlmutter also attended the press conference.
