WASHINGTON, D.C. — A congressional committee decided against amending banking rules for the cannabis industry.
If enacted, the new regulations would have prevented the U.S Department of Treasury from attempting to “penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, producer, or a person that participates in any business or organized activity that involves handling marijuana or marijuana products” in compliance with state and local law.
After considerable debate, the House Appropriations Committee rejected the regulations.
The measure could have fixed a major problem in the cannabis industry. Without access to banks, dispensaries are forced to operate with cash only. Often, the cash is kept onsite, making shops a prime target for criminals.
According to Rep David Joyce (R-OH), chief sponsor of the amendment, the issue is “not whether or not one approves of marijuana,” Joyce said. “This is about public safety and financial transparency.”
Once his initial proposal failed, Joyce tried to draft a narrower set of regulations aimed at giving only medicinal cannabis businesses access to the banking sector. Ultimately, that bill was withdrawn before a vote was held.
New regulations could have positioned banks to increase their clientele by working with cannabis companies without the fear of federal prosecution.
The proposed banking regulations were similar to the language used in the Cole Memoranda and Rohrabacher-Blumenauer amendment. The Cole Memo was a Department of Justice (DOJ) memo drafted by former Attorney General Eric Holder that advised federal officials against prosecuting any cannabis businesses operating within state law. It was rescinded by current Attorney General Jeff Sessions earlier this year. Rohrabacher-Blumenauer is a spending bill amendment included in the last several omnibus spending bills with a similar goal to the Cole Memo, but is actually enforceable. Unfortunately, it has to be reapproved with every congressional budget and it’s survival is constantly threatened by the partisan politics.
A bill by Elizabeth Warren (D-MA) and Cory Gardner (R-CO) was recently introduced that would make these regulations permanent.
Some law enforcement officials urged Congress not to legalize banking for The cannabis industry. The Fraternal Order of Police had voiced their oppossition through a letter submitted to Congress.
Letter to @USRepRodney & @NitaLowey advising them of our strong opposition to any amendment that would allow the marijuana industry full access to the American banking system. Drug cartels will be given the opportunity to launder money under the guise of marijuana normalization pic.twitter.com/y5a0gHPIUi
— National FOP (@GLFOP) June 12, 2018
In the letter, the group’s president, Chuck Canterbury, said that “public safety is threatened by the growing use of marijuana nationwide.”
However, many feel that access to banking would force dispensaries to operate transparently as electronic records would detail their financial activities.
Federal Reserve Chairman Jerome Powell was asked about cannabis banking while fielding questions at a press conference on Wednesday.
“This is a difficult area, because many state laws permit the use of marijuana and federal law still doesn’t,” he said. “So it puts federally chartered banks in a very difficult situation.”
However, Powell did appear to signal an openness to cannabis businesses working with banks.
“It would great if that could be clarified,” Powell said. “Our mandate has nothing to do with marijuana, so we just would love to see it clarified.”
