It’s “low hanging fruit” that committees should easily understand – but the real test comes TODAY: February 13th
Congressman Earl Blumenauer (D-OR), the founder and co-chair of the Congressional Cannabis Caucus in 2017 who has worked on cannabis legalization issues for over 40 years, is seeing more light at the end of a shorter tunnel when it comes to financial services and the cannabis industry.
One of the glimmering stars of hope: A new chair of the House Financial Services Committee, Representative Maxine Waters (D-CA), who is open to discussion about cannabis reform bills as her state continues to iron out details of the regulatory structure for retail cannabis sales.
At a press conference at the National Press Club in Washington, D.C. in late January, Blumenauer outlined the next steps based on a blueprint for legalization he released in October, 2018, which stated that almost every standing House committee has jurisdiction over some aspect of marijuana policy, and that within the first six months of the new Congress, these committees should hold hearings, bring in experts, and discuss potential policy fixes.
“We have been watching this movement mature, and I think it’s crested,” Blumenauer said at the NPC press conference.
Calling banking the “low hanging fruit” for legislators to work on, he added that legalization proponents like him are on the verge of meeting their objectives in this Congress.
“We can deschedule cannabis. And we can take care of the banking problems. And we can build the momentum because we need to stop the conflicts in 47 states that have some form of legalized cannabis. Now is the time to just get it done,” he said at the press conference.
Devastating Lack of Banking Services in a $Billion Industry
Banking in the cannabis business has been a huge problem for the industry, affecting every business that operates a grow or dispensary or ancillary services, which are all forced to pay outrageous amounts of money just to have a bank account to cover the bank’s risks in handling what is still, in the eyes of the federal government, laundering of "drug money".
[One mid-level Colorado dispensary told ACR that he was paying $3,500 a month in fees just to have a bank account because banks have to manage ongoing risk assessment for their cannabis business customers.]
The Cole Memo, issued in August, 2013 is essentially the only guidance for the Federal government about how to work with cannabis industry, with additional clarification for banks on managing risks and doing due diligence coming from Financial Crime Enforcement Network (FinCEN) on February 14, 2014.
It’s been a bumpy road. Last January, right after then-Attorney General Jeff Sessions rescinded the Cole memo (and action which sent shock waves through the industry), 19 state attorneys general wrote a letter requesting legislation that would “provide a safe harbor” for depository institutions that “provide a financial product or service to a covered business in a state that has implemented laws and regulations that ensure accountability in the marijuana industry.”
New Legislation on the Way
One of the current pieces of legislation about cannabis and banking garnering the most attention is the HR 2215 Secure and Fair Enforcement Banking Act, a bipartisan (though mostly Democrat) bill introduced by Representative Ed Perlmutter (D-CO) in April, 2017 now with 95 cosponsors – including Blumenauer, an original co-sponsor. It states that a depository institution “shall not, under federal law, be liable or subject to forfeiture for providing a loan or other financial services to a legitimate marijuana-related business.”
Blumenauer himself introduced legislation this year on January 9th,
HR 420, Regulate Marijuana Like Alcohol Act, that proposes removing cannabis from the Controlled Substances Act and switching government oversight control from the Drug Enforcement Administration to the Bureau of Alcohol, Tobacco, Firearms and Explosives.
“The grand bargain is not going to be any one person’s legislation,” Blumenauer said at the press conference. “It’s going to be a cumulative result of what happens in the committees to move it forward.”
The Comptroller of the Currency, Joseph Otting, echoed Blumenauer’s thinking on the subject, saying on January 16 that he hopes that the current conflict between state and federal laws that inhibits banks from serving cannabis-related businesses will be resolved by 2020.
“Congress is going to have to act at the national level to legalize marijuana if they want those entities involved in that business to utilize the U.S. banking system,” he told Politico, adding that he projected 25-30 percent odds it might be dealt with this year, “but I would hope by 2020 we can get this issue resolved.”
Blumenauer is the Elder Statesman of Cannabis
Blumenauer has been there since the beginning, working on all issues related to legalization. His state, Oregon, was the first state to decriminalize, and the first state to vote on full legalization.
Blumenauer told ACR that there are 60 pieces of legislation regarding many aspects of legalizing cannabis. “We've got legislation and we've got a committee that can move it,” he told ACR.
“There are 97 percent of the American public who are living someplace where there is state legal cannabis. And the manifest problems for not having full access to financial services are obvious to virtually everyone. This is not rocket science. I’m hoping that we can get out of this shutdown madness and be able to sit down and get to work. And I am hopeful that we can do that as soon as next month.”
(Editor’s note: A hearing by the U.S. Committee on Financial Services Subcommittee on Consumer Protection and Financial Services about access to financial services for the cannabis industry is scheduled for 2 p.m. on Wednesday, February 13.)
He said that most of the committee chairs understand the importance of working out a solution to the banking issue. “I think there is an appetite and an appreciation for that,” he told ACR. “But we really did get knocked on our heels with this shutdown insanity where we lost six weeks or more. But that shouldn’t stop us from taking things like banking and moving them forward.”
He says that, if you ask House of Representatives Speaker Nancy Pelosi, things like the cannabis banking issue are not a top priority.
“But I will tell you we have greater support in Congress than we have ever had,” he told ACR.
“We need to capitalize on getting those people with us to support what we want to do.”