Federal legislation that would allow banks and other financial institutions to provide services to marijuana businesses that are legal under their state’s law has been passed by a key House panel.
According to Reuters, the bill would provide sought-after clarity to banks across the country that want to do business with the growing marijuana industry, where companies have struggled to gain access to the financial system. The issue is especially relevant now that 10 states in the U.S. have legalized marijuana for recreational purposes; over 30 have passed some form of medical marijuana legalization.
The measure was broadly backed by a mixture of Democrats and Republicans. It now proceeds to the full House, where it is expected to be passed by the Democrat-led chamber in the near future. However, the bill faces an uncertain future in the Republican-led Senate, according to analysts.
“While all but 3 states allow for some form of legal cannabis use, marijuana is still illegal on the federal level”, states Reuters. “That has left banks largely unwilling to do business with businesses that sell marijuana or related enterprises, out of concern they could run afoul of federal laws.
In particular, banks are wary that taking deposits from pot businesses while marijuana remains illegal at the federal level could violate anti-money laundering laws, which in turn could put at risk their federal charters or access to federal payments systems.”
Currently, companies in the marijuana industry have extremely limited options for dealing with their finances, with many relying on strictly cash to do business. Numerous lawmakers noted that operating exclusively in cash can be extremely dangerous, making companies a target for theft.
The bill has the backing of the banking industry, where firms are eager for reassurance from the federal government they can engage in this sort of business. The American Bankers Association has told Congress it takes no stance on the legality of marijuana, but its widespread adoption by states “raises practical issues that must be addressed.”
Reuters notes that “Some Republican lawmakers expressed concern over permitting banks to engage in business that is still technically illegal. If Congress wants to allow banks to get into the marijuana business, it should legalize marijuana, they said.”
But proponents of the bill argued that with the vast majority of U.S. states taking steps to further legalize marijuana use, it makes no sense to refuse those businesses access to banks.
“The toothpaste is out of the tube, my friends,” said Representative Denny Heck, a Democrat from Washington.