By Spencer Feingold
Dozens of states and several U.S. territories have united to urge Congress to pass legislation that would allow marijuana businesses access to the federal banking system.
The bipartisan coalition, which is led by Colorado Attorney General Phil Weiser, sent a formal letter to Congressional leaders last week demanding that lawmakers pass the SAFE Banking Act or similar legislation that would provide a safe harbor for banks to provide financial services to the marijuana industry.
“We’ve got to bring this all into the sunshine and allow banks to take money from marijuana businesses,” Weiser told Cheddar in an interview Tuesday. “It is not safe, it is not good for compliance to do what we are doing now, which is building up lots of cash in these companies.”
Despite being legal in 33 states, marijuana is still classified as an illegal substance by the federal government, which leaves banks that work with state-licensed cannabis companies exposed to criminal and civil liability under the federal Controlled Substances Act. The risk to banks leaves the estimated $8.3 billion cannabis industry in a largely cash-based economy, which is expected to reach $25 billion by 2025, according to the coalition of attorneys general.
“This is simple: not incorporating an $8.3 billion industry into our banking system is hurting our public safety and economy,” California Attorney General Xavier Becerra said in a statement. “The SAFE Banking Act would reward taxpayers and small and local licensed businesses who play by the rules.”
The SAFE Banking Act — which was first introduced in April and currently sits in a House judiciary subcommittee — would essentially allow banks to service cannabis companies by shielding them from federal regulators. Supporters say the legislation will protect the industry from violent crimes, white-collar schemes, and tax fraud. It would also allow the government to collect taxes in a more consistent and orchestrated manner.
“It is hard to collect tax in an all cash economy,” Weiser explained, adding that Colorado has successfully used tax revenue from cannabis to fund programs like educational scholarships and housing for the homeless. “In the marijuana world, people want to be paying taxes, they want to be compliant. But it is just harder, even for those who are trying.”
Colorado and Washington, whose attorney general also signed the letter to Congress, were the first states to legalize recreational marijuana use.
“We are the pioneers allowing marijuana to be sold legally,” Weiser said. “We want Congress to recognize what has been an incredible transformation.”
The coalition’s letter stressed, however, that the legislation is not an endorsement of any specific approach to legalization or a push for legalization in states that choose not to allow legal cannabis use. The banking law is needed purely to “permit a sensible banking regime for legal businesses,” the letter read.
“Common sense demands action here,” Weiser said. “This is big business now, there are a lot of jobs. It is time that we recognize it and bring it into the sunlight. I think common sense will prevail.”
Weiser also called on the American public to speak up on the issue and urge lawmakers — especially in the Republican-controlled Senate — to pass the SAFE Banking Act to create a safe and taxable cannabis industry across state lines.