Rep. Perlmutter plans to introduce later this month legislation similar to The Marijuana Businesses Access to Banking Act of 2013.
By Noelle Skodzinski
It’s no secret that federal banking laws continue to plague the legalized marijuana industry, as, despite many states legalizing medical and/or recreational marijuana, the remains listed as a Schedule I drug under the Controlled Substances Act. This prohibits legal marijuana businesses–that follow state law–from opening bank accounts and operating as other businesses do. They are forced to operate as cash-only enterprises, inviting crime (mainly robbery) and adding to the burden of setting up a legitimate small business, with some business owners even reporting the need to hire armed guards to transport and store large amounts of cash. Some reports have cited other business owners hiding cash in basements or in the walls–reminiscent of a scene from the show "Breaking Bad." For legal businesses, this seems nothing shy of absurd.
Rep. Ed PerlmutterRep. Ed Perlmutter
To date, 23 states plus Washington D.C.–those with legal medical and/or recreational marijuana businesses–continue to face serious public safety concerns due to inaction on this issue. This is nearly half the country. More states are poised to face these issues as they introduce legislation and ballot initiatives to legalize marijuana–whether medical or recreational. Fortunately, a number of Congressional leaders recognize the issue and are working toward finding a solution.
In the 113th Congress, Rep. Ed Perlmutter (CO-07) and Rep. Jared Polis (CO-02) introduced legislation (H.R. 2652–The Marijuana Businesses Access to Banking Act of 2013) to update federal banking rules to resolve conflicts between federal and state laws to allow legitimate marijuana businesses to access the banking system. The Act did not pass.
Earlier this year, Rep. Polis introduced the Regulate Marijuana Like Alcohol Act (HR 1013), which would remove marijuana from the Controlled Substances Act and leave the decision to legalize up to the states. The bill now has 13 co-sponsors.Â
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Rep. Jared Polis
Thursday, Reps. Perlmutter and Polis  held a roundtable discussion with Kansas City Federal Reserve President Esther George and marijuana industry leaders to discuss at length the banking issues facing legal marijuana business owners.
Following the meeting, Reps. Perlmutter and Polis held a press call to answer questions about the current state of banking regulations for the marijuana industry and next steps to address the current problem, which Rep. Polis says is a “major public safety issue.” Rep. Perlmutter added, “We’re in a logjam when it comes to banking–from 401Ks, to payroll accounts to banking services–for legitimate, licensed businesses in Colorado.” Here are a few highlights of the press briefing:
- Rep. Perlmutter plans to introduce later this month legislation similar to The Marijuana Businesses Access to Banking Act of 2013. “We will run into some road blocks,” he said, but bi-partisan support is growing in Congress as more representatives and senators on both sides of the isle recognize the need for action on this front. A similar Senate companion bill also will be introduced by Oregon Senators Ron Wyden and Jeff Merkley. “We’re hoping we can come at it from both sides,” said Perlmutter.
- The U.S. Department of the Treasury issued guidance (“FinCEN Issues Guidance to Financial Institutions on Marijuana Businesses”) in February 2014 on how banks could work with legal marijuana businesses and to give banks increased assurances about working with federally illegal businesses. Still, these assurance were not enough for most banks. Currently, according to Reps. Perlmutter and Polis, approximately 8 banks and one or two credit unions provide services to legal marijuana businesses in Colorado, and about 60 percent of the legal marijuana businesses in the state are banked (and 40 percent are not). However, the estimated number of businesses being banked may be a bit high, as many may receive services, but then receive termination letters when a bank realizes the nature of the business or no longer wants to stay what they see as a risk-laden course. Many banks also are not accepting new business. Reps. Perlmutter and Polis discussed during the press call the possibility of petitioning FinCEN to clarify certain aspects of the current guidance.
- The Representatives said they see it as a positive that Kansas City Federal Reserve President Esther George agreed to meet with them and marijuana business owners, and said that George had a “great interest in learning about the issues” facing the industry. Rep. Polis said, “President George was circumspect in her remarks, but clearly understands the issues.”
The representatives said they welcome input from the banking system on potential solutions and cite growing momentum, and bipartisan and bicameral support to align federal and state laws on the banking front.
