Businesses Need Bank Accounts; Marijuana Shops Included

Originally published at blog.NORML.org

Imagine operating a business without a bank account. Or having to pay each of your employees and vendors in cash. Imagine being forbidden from letting your customers pay for purchases with a credit card, or being able to ask a bank for a small business loan.

This is the reality of hundreds of small and medium-sized business owners throughout the country who are engaging in the emerging cannabis marketplace.

To date, nine states – Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, and Washington – permit retail sales of recreational marijuana to adults. Furthermore, a total of 33 states have enacted policies to establish a regulated medical cannabis program.

Currently, state-licensed marijuana businesses face a web of conflicting regulations. Specifically, federal prohibitions largely prohibit these businesses from partnering with financial institutions, processing credit cards, and taking standard business deductions.

No industry can operate safely, transparently, or effectively without access to reliable banking solutions. While it is encouraging to see that a small but growing number of financial operators are beginning to provide necessary services to those engaged in state-compliant cannabis commerce, it is self-evident that this industry will remain severely hampered without better access to credit and financing.  

In 2017, then nominee for Treasury Secretary Steve Mnuchin was asked about these financial hurdles. Mnuchin stated, “I will work with Congress and the President to determine which provisions of the current tax code should be retained, revised or eliminated to ensure that all individuals and businesses compete on a level playing field.”

But while Mnuchin’s statements indicated a step in the right direction, ultimately, the responsibility is upon Congress — not upon the US Treasury Department or upon state lawmakers — to change federal policy so that these growing number of state-compliant businesses, and their consumers, may operate in a manner that is similar to other legal commercial entities. Under complete Republican control, the 115th Congress did nothing to address this issue.

Under new management, the House Financial Services subcommittee on Consumer Protection and Financial Institutions will hold a hearing today entitled “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses”

This represents a significant normalization of cannabis policy reform in Congress and a big victory for Representatives Ed Perlmutter (D-CO), Denny Heck (D-WA) and the recently formed Congressional Cannabis Caucus.

“Last fall when we introduced our blueprint for action in the 116th Congress on cannabis reform, we identified the access to banking issue as one of the first dominos that should fall. With Chairwoman Waters scheduling a hearing on the historic legislation by Congressmen Heck and Perlmutter, we are finally making progress toward addressing the irrational, unfair, and unsafe denial of regular banking services for state-legal marijuana businesses around the country,” said Rep. Earl Blumenauer, Founder, and Co-Chair of the Congressional Cannabis Caucus. “Congressmen Heck and Perlmutter have been tireless champions of this new and vibrant industry and this is an important step forward toward ultimately ending the failed prohibition of marijuana.”

Legislation introduced by Rep’s Perlmutter and Heck known as the SAFE Banking Act sought to address this issue in the 115th Congress. Yet they were denied an opportunity to receive either a committee hearing or markup under

For a rapidly growing industry that seeks legitimacy and requires transparency, the inability to obtain banking and credit access remains a primary, but unnecessary, roadblock. In order to truly bring the marijuana industry out of the shadows, actions need to be taken by Congress to amend these outdated and discriminatory practices.

In order to best support the states that have had the good judgment to license and regulate businesses to produce, manufacture, or distribute cannabis, it is critical to address this aspect of the failed policy of federal marijuana criminalization as part of any reform package moving forward.