Bill Would Ensure Legal Cannabis Businesses Have Access to Financial System
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“I’m pleased that the Banking Committee is holding a hearing on this important topic. Across my home state of Montana, and in communities across the country, legal businesses are facing a public safety crisis. These businesses are often forced to operate in all-cash, are appealing targets for robbers. Senator Merkley talked about what’s happening in his State of Oregon, just to the north of him in Washington state for instance, 2022 saw at least 100 armed robberies at cannabis retail stores – the most in the past 10 years. Tragically, several these incidents ended in bloodshed.
“The ‘SAFE Banking Act’ would help address a major cause of this increase in violent crime by providing a safe harbor for depository institutions and service providers to transact with state-sanctioned marijuana businesses. In short, this bill would make it much easier for businesses to put their cash into banks. It’s really not that complicated. Some of the witnesses today will say that there are hundreds of banks and credit unions providing financial services to state-sanctioned marijuana businesses and that ‘SAFE Banking’ is not needed. However, the truth is only about nine percent of the financial institutions in America have provided services to any marijuana-related businesses, meaning that those who are providing financial services face limited competition and charge substantially more to bank these clients than other businesses, resulting in services being prohibitively expensive for many businesses.
“This legislation would also help federal and state law enforcement distinguish between the legal and the illegal marijuana businesses. Opponents of this bill will say that SAFE will help to grow the $25 billion market for marijuana in the United States. However, the real size of this market is estimated to be $100 billion, of which roughly 75 percent is illicit cannabis production. Allowing cash from legal, regulated businesses to enter the banking system will help law enforcement more easily distinguish legitimate actors and focus more resources on prosecuting the illicit market and in doing so, may actually shrink the size of the overall industry and reduce consumption in the United States.
“If nothing else, ‘SAFE Banking’ will greatly increase tax compliance and tax revenues for states. This legislation is widely supported by banks, by credit unions, by the insurance industry and many other service providers who at present do not have clear guidelines for how they can safely and legally transact with state-sanctioned marijuana businesses. Roofers, plumbers, electricians, and other similar service providers, service businesses are technically at risk of engaging in illegal money laundering simply for putting on a few shingles, fixing a leaky pipe or safely wiring a building. In states where these are legally operating businesses, do opponents of this bill really believe that hard working trades men and women should be put in this impossible position?
“There’s a bipartisan coalition of 38 state and territorial attorneys general who have come out in support this bill in the past and we’ve strengthened it considerably based on feedback from the Department of Justice. I want to quote one of my county sheriff’s back in Montana and Lincoln County Sheriff Darren Short, up in the very northwest part of Montana.
“He says this, ‘It concerns me that businesses have such a large amount of cash on hand, which is clearly a liability and a public safety issue. I also believe that any all-cash business is going to be rife with fraud. So, it’s an accounting problem as I see it, too. As far as marijuana legislation goes, the voters of Montana made that decision. And now it’s our role to make it safe and make it work. I’m happy to support the SAFE Banking Act.’
“This bill does not legalize marijuana. I personally do not support federal legalization of marijuana. The people of Montana voted 57 to 43 in a ballot initiative in 2020 to legalize recreational marijuana. The people in states across this country have spoken and it’s abundantly clear that the status quo is not only untenable, it’s very dangerous. The ‘SAFE Banking Act’ is a commonsense bill that can and should pass and would immediately improve the public safety threats we’re seeing on the ground in our states. I ask my colleagues to look at this issue with open eyes. I look forward to hearing their input today.”
Senator Daines also had the opportunity to question witness Mr. Ademola Oyefeso of the Food and Commercial Workers International Union on what Senator Daines described as the “human factor of this equation” — the lives that are put at risk without this commonsense public safety fix in place.
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Senator Daines: “Thank you. I’d also like to begin my time by addressing the human factor of this equation. Mr. Oyefeso I think you’re probably as good a witness on this as any on this particular topic, because in your testimony, you touched on the physical dangers, including being robbed at gunpoint. Cannabis workers are facing danger because they and their employer are forced to operate primarily in cash under the current system. From what you have heard from your members, is the situation on the ground getting safer or more dangerous for cannabis employees and the public?”
Mr. Oyefeso: “It’s not safer, it’s getting more dangerous because people as we’ve heard, more and more people are going to the stores so criminals now realize that there’s more and more possibilities of robbing large amounts of cash. So now workers, if your dispensary doesn’t have a security team of you know, people with guns standing there, you have to worry that when you’re closing at night, are people going to rush in and rob you? We’ve had members who you know, if you’re getting paid in cash, people, if a former worker knows you’re the payday and you’re getting paid in cash, you’re going home and we have members who are pharmacists at cannabis dispensaries who make $68 an hour so these are good jobs when they’re organized and they can go home with $2,000 and worry about ‘I’m holding $2,000 cash in my pocket’ where the rest of us get paid and it’s deposit—direct deposited into our bank. So, there is your weekly take home that you could lose in a night, there is your life you can lose. You go to work, you have a good job, you want to go home to your family. And because it’s not banked, you have that risk every night.”
Senator Daines: “I mentioned in my own testimony, as we think about, you know, the employees of these businesses, you think about the other businesses that serve these businesses, the tradesmen and women. If they’re going to fix a leaky pipe or fix a wire, a transaction is going to occur in cash and so, the subcontractors that might be trying to do some work with these legal businesses are also put at risk. So, thank you for your testimony.”
Senator Daines later spoke about the need to address these issues in states that have voted to legalize marijuana for the safety of businesses, communities and law enforcement.
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Senator Daines: “I’d like to switch gears and touch on the current cannabis landscape across the United States. Over the past decade, 22 states have legalized medical use of cannabis, with 20 of these states having taken the additional step of legalizing recreational use, and that includes my home state of Montana. Cannabis use is decriminalized, in some form, in 47 states and the District of Columbia. Well, I personally voted against legalizing recreational use, and here’s kind of a part of politics, I won my reelect 55 to 45 in Montana, while the ballot initiative passed 57 to 43. I recognize and appreciate the reality that we face and that reality is a legal patchwork that just doesn’t work for banks, for businesses or for law enforcement.”
Background
The “Secure and Fair Enforcement (SAFE) Banking Act” will ensure that legal cannabis businesses have access to banks, credit unions and other financial institutions. Today, many legal cannabis businesses must conduct all of their business entirely in cash, opening them up to theft, tax evasion and organized crime. To read more about the SAFE Banking Act, see HERE.
To see statements of support for Daines’ bill from Montana sheriffs, click HERE.