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Cannabis Businesses Desperately Need Bank Access: Will This Reform Measure Make It Happen?

A bipartisan group of senators has introduced a far-reaching piece of legislation that would make it legal for banks to offer their services to legal marijuana businesses. Current federal law leaves banking institutions vulnerable to criminal prosecution for providing services to cannabis businesses, even those that are operating within a legal capacity under state law, creating a serious security risk for those businesses that are often forced to operate on a cash-only basis.

The Marijuana Business Access to Banking Act of 2015 hosts an impressive cadre of supporters from across the aisle: Senators Ron Wyden (D-OR), Jeff Merkley (D-OR), Michael Bennett (D-CO), Cory Gardner (R-CO), and Patty Murray (D-WA). 

Senator Murray voiced her support for the bill, saying:

“Small, legal businesses should not be turned away from banking service because of fear of unjustified prosecution, and this legislation will ensure that they have access to the same services as other small businesses and can continue to grow and succeed.”

Since the bill was introduced on Thursday, Republican presidential hopeful Rand Paul joined the growing list of sponsors for the act, furthering the bipartisan strength of the bill. 

There have been several similar bills introduced in the past in an attempt to reconcile federal banking laws with legalized cannabis businesses, but none have had such widespread endorsements. In January 2014, the Obama administration announced regulations that would make it easier for banks to do business with legal marijuana companies, but the banks haven't budged on their stance because the federal laws pertaining to cannabis remain unchanged, leaving banks that work with cannabis businesses vulnerable to prosecutions or sanctions.

The bill would put limits on federal bank regulators in four different capacities:

  • Prohibiting, penalizing, or discouraging depository institutions from proving financial services to a legitimate, state-sanctioned, and regulated business;
  • Terminating or limiting a depository institution's deposit Insurance under the Federal Deposit Insurance Corporation for providing services to a state-sanctioned and regulated marijuana business solely because that institution is providing services to a legitimate state-sanctioned and regulated cannabis business;
  • Recommending or incentivizing a depository institution to halt or downgrade providing any kind of banking services to these businesses;
  • Taking any action on a loan to an owner or operator of a marijuana-related business..

The bill also creates a safe harbor from criminal prosecution, liability, and asset forfeiture for banks and their officers and employees who are providing these services, while still maintaining the banks’ right to choose not to offer these services. Banks would be required to comply with current Financial Crimes Enforcement Network (FinCEN), while allowing the guidelines to be streamlined over time. 

As more and more states are eyeing a recreational bid in 2016, access to banking for cannabis businesses is becoming more and more crucial. Without a safe institution in which to store the high volumes of cash flowing into these thriving businesses, many shops are forced to rely on heavy security, armored cars, and even paying high state and federal taxes all in cash.

It’s high time we made this industry safer and more reliable for everyone.