The governors of 24 states and U.S. territories sent a letter to congressional leaders on Thursday calling on lawmakers to pass legislation that would permit financial institutions to provide banking services to the regulated cannabis industry. The letter from the bipartisan group of two dozen governors seeks passage of the Secure and Fair Enforcement (SAFE) Banking Act, which was approved by the House of Representatives in September as part of a comprehensive defense spending authorization bill.
In the letter, which was sent to Senate Majority Leader Chuck Schumer of New York, Speaker of the House Nancy Pelosi and other Democratic and Republican leaders in Congress, the governors of 21 states, Washington, D.C., the U.S. Virgin Islands and Guam, call for provisions of the SAFE Banking Act to be included in the final version of the National Defense Authorization Act for the 2022 fiscal year.
Relief for a Cash-Heavy Industry
If passed by the Senate and signed into law, federal banking regulators would be prohibited from penalizing banks that choose to serve cannabis firms doing business in accordance with state law. Under current regulations, banks are subject to penalties under federal money laundering and other laws for servicing such companies, leaving the cannabis industry to operate in a risky environment heavy in cash. The legislation was initially introduced in the House in 2013 by Democratic Rep. Ed Perlmutter of Colorado, who has reintroduced the bill each subsequent congressional cycle.
The letter sent on Thursday, which was led by Democratic Governor Jared Polis of Colorado, notes that 37 states, four U.S. territories and the District of Columbia have passed recreational or medical cannabis legalization measures. But businesses in the regulated cannabis industry are still largely unable to access traditional banking services including deposits, payroll and checking accounts.
“Medical and recreational cannabis sales in the U.S. were estimated to total $17.5 billion last year, but because of antiquated federal banking regulations, almost all cannabis transactions are cash-based,” the governors wrote in their letter. “Not only are cash-only businesses targets for crime, cannabis businesses are further disadvantaged compared to other legal businesses by being unable to open bank accounts or obtain loans at reasonable rates.”
The SAFE Banking Act was passed by the House of Representatives in 2019 and again last year as part of a COVID-19 pandemic relief bill. The House passed the bill again in April as standalone legislation and has included the measure in the defense authorization bill currently under consideration, but the bill has so far failed to be passed by both houses of Congress and signed into law by the president.
“It’s time for Congress to allow cannabis-related businesses to have better access to the banking system and operate with normal bank accounts,” Polis said in a press release on Thursday. “Thank you to Congressman Ed Perlmutter who has continually pushed for legislation to address this important issue. After years of cannabis being legal in a multitude of states, it is long overdue for cannabis businesses to finally financially operate alongside other businesses in the open national banking system.”
The governors also noted in the letter that while cannabis has been legalized in some form by a majority of U.S. states, the continued lack of traditional banking services and large amounts of cash throughout the supply chain leave legal marijuana businesses at increased risk of robbery and other crime. Additionally, the lack of access to loans inhibits the growth of the booming industry.
“The SAFE Banking Amendment will remedy these harms and help keep communities in our states and territories safe by allowing legitimate and legal cannabis companies to access banking services,” the letter continues. “Financial institutions will subject the funds and account holders to rigorous anti-money laundering and ‘Know Your Customer’ requirements that will further help states where cannabis has been made legal to keep bad actors out of the system.
“The SAFE Banking Act has more bipartisan support than ever before, and Congress must take steps to ensure that this measure is included in the final version of the NDAA that goes to President Biden’s desk,” the governors concluded.
In addition to Polis, the letter to Congress was signed by the leaders of Alaska, California, Connecticut, Guam, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New Jersey, New York, North Dakota, Oregon, Pennsylvania, Rhode Island, the U.S. Virgin Islands, Utah, Virginia, the state of Washington, Washington, D.C. and Wisconsin.
In April, a bipartisan group of 21 governors from a nearly identical list of states and territories called on Congress to pass the SAFE Banking Act after the measure was approved by the House of Representatives.