A bipartisan coalition of 21 state attorneys general and the attorney general of D.C., have sent a letter to congressional leaders urging them to pass the SAFER Banking Act.
Earlier today the Senate Committee on Banking, Housing and Urban Affairs passed the SAFER Banking Act (S.2860), with Senate Majority Leader Chuck Schumer vowing to give it a floor vote “very soon“.
Adding to the proposal’s growing momentum, a large group of attorneys general has sent a letter asking congress to pass the bill. The act would provide federal legal protections for banks, credit unions and other financial institutions that provide financial services to marijuana businesses that are legal under their state’s law.
The letter is signed by the attorneys general for Arizona, Maryland, Maine, New York, Washington D.C., California, Colorado, Georgia, New Jersey, Illinois, Hawaii, Massachusetts, Michigan, Connecticut, New Mexico, Washington State, Pennsylvania, Nevada, Vermont, Rhode Island and Oregon.
“We write today to urge you to advance the SAFER Banking Act of 2023 to increase access to regulated banking and financial services for state-licensed cannabis businesses in jurisdictions where such dispensaries are legal”, begins the letter that’s addressed to “Congressional Leaders”. “We are a bipartisan group of state attorneys general who, like you, have a strong interest in enabling economic growth and stability while simultaneously protecting the physical and economic wellbeing of constituents working in this industry. We are also committed to the rule of law and the strict enforcement of cannabis laws so as to rid the economy of illegal actors.”
The letter continues:
Three-quarters of states and several territories have legalized some use of cannabis. Thirty-eight states, three territories and the District of Columbia now permit medical use of cannabis products. Twenty-three states, two territories and the District of Columbia have enacted measures to regulate cannabis for adult use. It is estimated that, as of 2022, the legalized cannabis industry provides over 400,000 full time equivalent jobs across the country. These businesses have a sizable economic impact. Industry experts have recently projected that combined U.S. sales of regulated cannabis could reach $33.6 billion by the end of 2023. Changes in cannabis policy are evolving rapidly and the industry is growing even faster.
Notwithstanding the large majority of Americans with legal access to marijuana products, cannabis presently remains classified as an illegal substance under the federal Controlled Substances Act and certain federal banking statutes. The current federal laws present a risk of criminal and civil liability to banks providing services to state-licensed cannabis dispensaries and related businesses. This risk has significantly inhibited the ability of financial institutions to provide services to regulated cannabis operators and leaves those businesses struggling to find financing. The lack of access to banking services creates both barriers to entry into the industry and instability for existing businesses. Recently, Mastercard announced that it will no longer allow its cardholders to use their bank cards to purchase cannabis, cutting off a key revenue stream and making it harder for customers and businesses alike. Further, where the public perceives that regulated businesses can only conduct business in cash, employees and customers are at greater risk of violent crime in pursuit of that cash. Several jurisdictions have seen a spike in robberies of cannabis businesses, some of which have resulted in deaths. Steady access to regulated banking is essential to the economic success of these businesses and the physical safety of our constituents.
The current banking restrictions also constrict state agencies’ effort to collect taxes and conduct oversight. As of August 2023, twenty states collect tax revenues derived from cannabis. This number will continue to rise as Delaware, Minnesota, and Virginia have legalized expanded cannabis markets but have not yet begun taxable sales. Many state cannabis regulators have reported that they have been turned away by the financial institutions that regularly service the agencies for other business and tax needs. Certain state regulators were told that banks would not accept funds related to their regulated cannabis programs. Some others were denied access to purchasing cards or denied the ability to accept credit card payments from regulated businesses. This legislation would ensure that state governments do not forfeit hundreds of millions of dollars in tax revenue that the cannabis industry generates.
To address these challenges, we ask that the Senate advance the SAFER Banking Act or similar legislation that would establish a safe harbor for depository institutions providing a financial product or service to a regulated business states that have regulations to ensure accountability in the cannabis industry. An effective safe harbor would bring billions of dollars into the banking sector, enabling law enforcement, federal, state, and local tax agencies, and cannabis regulators in thirty-eight states and several territories to more effectively monitor and ensure compliance of cannabis businesses and their transactions.
Our banking industry must be given the tools to address the needs of businesses throughout the states and territories. This will enable the evolution of a banking system for legalized cannabis- related businesses that is both responsive and effective in meeting the demands of our economy. We look forward to working with you as Congress moves forward in this process and to lending our voice and expertise as you develop legislation.
