(CN) – Insisting that an all-cash industry invites violent crime and financial misconduct, the top lawyers of 38 states urged Congress Wednesday to protect banks that take money from state-licensed marijuana businesses from federal criminal penalties.
The state attorneys general implored congressional leaders to support the SAFE Banking Act, a proposed law that would give licensed cannabis companies access to the federal banking system.
“Regardless of how individual policymakers feel about states permitting the use of medical or recreational marijuana, the reality of the situation requires federal rules that permit a sensible banking regime for legal businesses,” 38 state attorneys general wrote in their letter.
The U.S. House Financial Services Committee advanced the bill in a 45-15 vote in March, but obstacles remain. Opponents maintain the federal government shouldn’t make it easier for companies to profit from selling a substance still classified as a Schedule 1 drug with “a high potential for abuse” under federal law.
“Federal law is the supreme law of the land,” said Carla Lowe, founder of the group Citizens Against Legalizing Marijuana. “At this time marijuana is a controlled substance. Therefore, any money collected for marketing, cultivating or growing is illegal.”
But in a committee hearing earlier this year, state regulators and cannabis business owners testified the lack of access to banks makes companies targets of violent crime and hampers state efforts to enforce regulations and collect taxes.
“We have members who have been held up, businesses have been robbed, and warehouses have been raided because of the thought that there was so much cash on hand,” said Josh Drayton, a spokesman for the California Cannabis Business Association, by phone Wednesday.
It doesn’t just pose problems for the businesses, Drayton said. His own organization, which represents cannabis business interests but doesn’t make, sell or touch the plant, has repeatedly lost its banking services.
Drayton said the association’s health insurance has also been questioned because “cannabis” appears in the company’s name.
California legislators and officials have proposed creating a state bank that might alleviate some of these problems for licensed marijuana companies.
A committee studying the issue said last year that the public bank option was “too risky” due to concerns that state employees could be targeted by federal authorities.
Creating a public bank could also turn out to be an unwise investment if the federal government relaxes its prohibition on marijuana, the working group concluded.
Justin Strekal, political director for the marijuana advocacy group NORML, insists better access to banks will make the legal marijuana industry more transparent and convenient for consumers.
“No industry can operate safely or effectively without access to banks or other financial institutions and it is self-evident that this industry, and those consumers that are served by it, will remain severely hampered without better access to credit, financing, banking, and card processing,” Strekal said in an email.
Despite the disharmony between state and federal laws, the legal marijuana industry continues to grow in the United States with an estimated $8.3 billion in sales in 2017 and projections of $25 billion in revenue by 2025.
California Attorney General Xavier Becerra said in a statement that it’s time the federal government takes a cue from the more than 30 states that have legalized marijuana in some form and start enacting sensible cannabis policy.
“The SAFE Banking Act would reward taxpayers and small and local licensed businesses who play by the rules,” Becerra said.
Opponents remain committed to denying those who grow and sell the plant from obtaining any benefits under federal law.
Luke Niforatos, chief of staff and senior policy director for the anti-legalization group Smart Approaches to Marijuana, called it “unfortunate” that state attorneys general want to “grant cover” to federally illegal businesses when their job is to “enforce the law.”
“The SAFE Banking Act is nothing more than backdoor legalization at the federal level, and we believe that most attorneys general when they realize what this really about, do not support legalization of marijuana,” Niforatos said.