The struggle for marijuana businesses in states that have legalized recreational use is a noted one. Businesses cannot use banks because they operate under federal regulations and they will not handle money for illegal industries. Therefore, the banks lose out on the business, and the businesses are forced to deal in cash for large transactions, including tax payments.
Banks have recognized the faulty logic in this approach to the legalized marijuana industry, and years of pushing for changes at the federal level may be influencing a potential change. On Feb. 13, the U.S. House of Representatives held a hearing on the matter. It was noteworthy enough to banking institutions that the hearing was announced via numerous emails and conference calls.
During the hearing, the House Financials subcommittee discussed the Secure and Fair Enforcement Banking Act of 2019, a bill that would protect both the banks and their employees if they were to handle funds for marijuana businesses — provided those businesses operate in a state where they are legal.
The move to protect banks is two-fold: for one, the issue with funds related to marijuana is far-reaching as some banks are hesitant to handle some of their long-standing accounts because those businesses could be interacting with marijuana businesses.
One example is a utility company that could be providing electricity to a business growing marijuana and receiving cash payments for that service. When those funds are deposited, the bank becomes associated with the marijuana business that is legal in that state but still illegal at the federal level.
The second area to support protecting the banks is the amount of potential crime that can be averted if marijuana businesses can operate as any other business and utilize banks. Crimes like robbery and even murder can be prevented if marijuana businesses are not noted to have large amounts of cash on hand at all times since they cannot open bank accounts.
This protection also would make life safer for those who work for marijuana businesses — as those employees get pay cheques that number in the thousands on a bi-weekly basis — and have to keep that cash on hand.
The issue for legislation like this, as always, is reticence from sitting Republicans. In fact, some people in the know in Washington feel that the real sticking point will be the Senate and Majority Leader Mitch McConnell, who is not shy about voicing opposition to anything legalizing marijuana.