SACRAMENTO, Calif. (CN) – A bipartisan mix of attorneys general from states that have legalized cannabis urged congressional leaders Tuesday to pass legislation that would allow banks to do business with licensed pot retailers.
Law enforcement officials from 17 states, the District of Columbia and Guam say exempting banks that service cannabis businesses from federal criminal and civil penalties would provide safeguards for a multibillion dollar industry operating largely on cash transactions.
“This would bring billions of dollars into the banking sector, and give law enforcement the ability to monitor these transactions,” the attorneys general said in a three-page letter. “Moreover, compliance with tax requirements would be simpler and easier to enforce with a better-defined tracking of funds.”
The bipartisan letter, signed by attorneys general from states including California, New York, Iowa and Alaska, comes less than two weeks after the Trump administration announced plans to again give federal prosecutors room to enforce marijuana laws. Attorney General Jeff Sessions’ memo roiled lawmakers from states that allow medical and recreational cannabis use.
Sens. Corey Gardner and Rand Paul, both Republicans, said the apparent reversal of the Obama-era drug enforcement policy infringes on states’ rights.
“With no prior notice to Congress, the Justice Department has trampled on the will of the voters in CO and other states,” Gardner, R-Colo., tweeted.
While 29 states and several U.S. territories have approved some form of legal marijuana over the last several decades, banks have mostly shunned the industry. With marijuana in the same category as cocaine under federal drug laws, banks have been shy to accept deposits or lend to marijuana businesses.
Advocates for a marijuana banking system say the banks’ conundrum forces the pot industry to operate on a cash basis and in turn opens it up to criminals. According to the attorneys general, legal pot sales topped $6.7 billion in 2016 and could surpass $20 billion by 2021.
California is one of many states searching for a banking solution after voters approved adult use of recreational marijuana in November 2016. It created a Cannabis Banking Working Group and California Treasurer John Chiang has asked the Trump administration to address the growing state-federal conflict.
California Attorney General Xavier Becerra said Tuesday that the Golden State wants to shed light on the legal marijuana “gray market” and find ways for businesses to safely deposit and pay their pot taxes.
“This is an issue that is impacting both red and blue states. The future of small and local licensed businesses has been clouded by the Trump administration’s relentless attacks on progress, in conflict with the will of voters,” Becerra said in a statement. “Congress has the power to protect a growing $6.7 billion industry and the public safety of our communities.”
In the letter addressed to House Speaker Paul Ryan, R-Wis., Senate Majority Leader Mitch McConnell, R-Ky., and other Congressional leaders, the signatories asked Congress to advance the Secure and Fair Enforcement Banking Act introduced last year.
Known as the SAFE Banking Act, the legislation would prohibit federal banking regulators from terminating or limiting a bank’s deposit insurance in retaliation for servicing cannabis-related businesses. It also immunizes bank officers and employees from prosecution for performing transactions with pot retailers or cultivators.
The proposal is currently in a Senate committee but has not had a hearing despite being cosponsored by 12 senators, including Gardner, Paul, Sen. Bernie Sanders, I-Vt., and Sen. Elizabeth Warren, D-Mass.
Hoping to spur action on the SAFE Banking Act or similar legislation, a California state lawmaker has introduced a symbolic resolution that would ask Congress and Trump to pass and sign financial protections for the banking industry.