U.S. Treasury Secretary Janet Yellen told lawmakers Thursday she would welcome legislation that would “clarify for banks what their responsibilities are” when it comes to banking cannabis companies.
Rep. David Joyce, R-OH, had asked Yellen about her department’s position on the Secure and Fair Enforcement Regulation (SAFER) Banking Act, which would make it easier for banks to serve state-legal cannabis businesses.
Joyce, who co-chairs the Congressional Cannabis Caucus, said he had flagged to former Treasury Secretary Steven Mnuchin five years ago the issue created for cannabis companies by conflicting state and federal laws. Not much has changed in the meantime, Joyce said.
More than three-quarters of the country has legalized cannabis in some form at a state level — 38 states made it available for medical use, and 24 have approved it for recreational use. However, it’s still illegal at the federal level, and a Schedule III substance under the Drug Enforcement Administration.
Its federal illegality presents a hurdle for banks, who remain concerned about violating anti-money laundering laws. And because the number of banks who will touch cannabis-tied money remains relatively small, cannabis companies report that they’re forced to do business in cash. This, they say, creates security issues — such as the threat of armed robbery — and, from a business perspective, makes financing a challenge.
“The fact that marijuana is outlawed by the federal government creates an impediment to [banks'] willingness to provide banking services, services to cannabis firms, and it creates all the problems that you're familiar with,” Yellen told lawmakers Thursday. “I think legislation may be necessary to raise the comfort level banks have with doing this business.”
Legislation related to cannabis banking has been passed by the House seven times in the past decade, but has yet to be heard on the Senate floor. In a historic first, the Senate Banking Committee approved a revised bill in September by 14-9, sending the legislation to the full Senate.
Rep. Steny Hoyer, D-MD, said Thursday he would do his part to help pass SAFER Banking, as the current cash-heavy situation is putting people who work around it “in a vulnerable position.”
