WASHINGTON, D.C.—As anyone who's familiar with the criminalization of cannabis is aware, our current problems with the recreational drug can be traced to one man: Harry J. Anslinger, the first Commissioner of the Federal Bureau of Narcotics—and by all accounts, an incredible racist who pushed through nationwide criminalization in order to target Mexican immigrants, many of whom had smoked the stuff in their own country and brought it with them (or grew it here) when they immigrated.
Pot (or grass or weed) remained illegal in all states until 1996, when California voters approved Proposition 215, which allowed the use of cannabis for certain ailments if approved by a licensed physician. In the early 2000s, several other states also legalized medical marijuana, and then, in 2012, Colorado enacted legislation which legalized cannabis for recreational purposes—and since then, several other states have followed suit, to the point that now, 33 states, four U.S. territories and the District of Columbia all allow marijuana to be used at least medically, if they have not outright legalized it.
Just one trouble: Pot is still technically illegal under federal law. It's considered a "Schedule I" drug under the federal Controlled Substances Act of 1970... and that's been causing major problems for marijuana dispensaries, since most banks, being federally insured and regulated, won't deal with them, and they're forced to do business entirely on a cash basis. A rundown of the problems they face can be found here.
Fortunately, plenty of federal legislators are hip enough to recognize the dilemma faced by legal marijuana businesses vis à vis banks—a dilemma which attorney Hilary Bricken described as one which "ultimately helps keep cannabis in the shadows and out of reach of full legitimacy and transparency"—and that led 109 congressional Representatives, led by Colorado Rep. Ed Perlmutter, to introduce the Secure And Fair Enforcement (SAFE) Banking Act of 2019, whose avowed purpose is to "increase public safety by expanding financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses."
"With respect to providing financial services within a State, political subdivision of a State, or Indian country that allows the cultivation, production, manufacture, sale, transportation, display, dispensing, distribution, or purchase of cannabis pursuant to a law or regulation of such State, political subdivision, or Indian Tribe that has jurisdiction over the Indian country, as applicable, a depository institution that provides financial services to a cannabis-related legitimate business or service provider, and the officers, directors, and employees of that depository institution may not be held liable pursuant to any Federal law or regulation," the SAFE Act states in part.
"For purposes of sections 1956 and 1957 of Title 18, United States Code, and all other provisions of Federal law, the proceeds from a transaction conducted by a cannabis-related legitimate business or service provider shall not be considered as proceeds from an unlawful activity solely because the transaction was conducted by a cannabis-related legitimate business or service provider, as applicable," it adds.
Such legislation has been talked about for more than two years, but discussion was muted in the early Trump days by the fact that then-Attorney General Jeff Sessions had announced that he would be implementing a federal crackdown on pot sellers and growers, even as more and more states were legalizing it. But with Sessions gone, several pro-marijuana-legalization bills have been introduced, though the SAFE Act may be the most important one for marijuana businesspeople.
And the really good news is that now that bill has the backing of the attorneys general of 38 of the 50 states who, according to an article on Law360.com (subscription required), sent congressional leaders a letter Wednesday urging them to pass legislation that would both allow cannabis companies to utilize banks and protect the financial institutions from liability for serving the industry."
The letter was the brainchild of the National Association of Attorneys General, and signers included Colorado Democrat Phil Weiser as well as Republicans Wayne Stenehjem of North Dakota and Leslie Rutledge of Arkansas. In fact, as Perlmutter pointed out, the National Association of Attorneys General only makes statements on public policy when such legislation has bipartisan support from a supermajority of the country's attorneys general.
"The resulting [gray] market makes it more difficult to track revenues for taxation and regulatory compliance purposes, contributes to a public safety threat as cash-intensive businesses are often targets for criminal activity, and prevents proper tracking of billions in finances across the nation," the attorneys general wrote in the letter regarding the lack of bank access.
While the letter notes that the act would cover cannabis businesses in any state that had some form of legal cannabis, including medical, recreational and cannabidiol, it doesn't specifically mention recreational use—but in states where recreational use is legal, it's likely that such states would strongly suggest (if not mandate) that the banks provide their services to all pot dealers, whether medical or recreational.
The SAFE Act was introduced on March 7, and is still under discussion, and on April 8, it was referred to the Subcommittee on Crime, Terrorism, and Homeland Security. After that subcommittee makes its decision on the bill, it may go to other subcommittees as well—and considering the current makeup of the Senate, it may have rough going there even if it passes the House (as it's likely to do). But even dyed-in-the-wool Senate Republicans may be able to understand that this is something the public really wants, and that may ease its passage.
