Until the federal government lifts its ban on marijuana, most growers, processors and retailers in the rapidly expanding industry will continue to operate on a cash-only basis. Marijuana is legal, either medically or recreationally, in 34 states and the District of Columbia, but not under federal law. So most banks and credit unions are hesitant to work with cannabis businesses, whether legal and state-licensed or not. Without access to a financial institution, these businesses are targets for robberies.
That’s why California is debating legislation to create and license charter banks and credit unions to provide limited financial services to cannabis businesses until the federal government establishes protections for all banks. Sixteen other states have passed legislation this year to help cannabis and hemp businesses access financial services.
Congress is now debating the Secure and Fair Enforcement Banking Act of 2019, or SAFE Banking Act, which would protect banks against federal punishment for working with state-approved cannabis businesses. Other federal efforts include the STATES Act, which would allow states to craft their own policies on cannabis even if it isn’t legal nationally.
Opponents are against the legal trade of marijuana in general, believing it’s a threat to public health that outweighs any tax benefits a state might gain from it.
At press time, the House Financial Services Committee had advanced the SAFE Banking Act with bipartisan support.