California Attorney General Xavier Becerra is joining a bipartisan group of 34 attorneys general in urging Congress to approve a coronavirus relief package that would let marijuana businesses use traditional banking services.
The Democrat-controlled House on Friday, May 15, approved the idea of granting banking access to cannabis businesses as part of the $3 trillion HEROES Act, which would provide the biggest package of programs yet aimed at buffering the economic fallout of the coronavirus pandemic.
Banking services are out of reach for the cannabis industry, even in states where recreational use of the plant has been approved, because marijuana is illegal under federal law.
The idea isn’t popular in the GOP-controlled Senate, where Republican leaders have been blasting the HEROES Act in general and the cannabis banking provision in particular.
But Becerra and the other attorneys general around the country say the pandemic has heightened the need for safe transactions for cannabis business, which have been deemed essential and allowed to continue operating with varying restrictions in California and other states that have legalized marijuana.
“It’s unwise and untenable to keep a $15 billion industry in the shadows — especially in the midst of an economic downturn,” Becerra tweeted Tuesday.
A May 19 letter signed by Becerra and his colleagues states that public safety threats caused by cannabis being a largely cash industry “have intensified in the months since the pandemic began.” The letter also notes that cash transactions put everyone at heightened risk of exposure to the virus (though public health experts have said that the odds of transmitting the virus via money are small). And the letter notes that state and local governments, which are predicting massive budget shortfalls, need “the ability to efficiently collect tax revenue from the marijuana industry, estimated to have generated $15 billion in sales in 2019.”
Democrats’ latest stimulus bill didn’t call for opening small business loans to the cannabis industry, as many industry insiders had hoped. But it does include language from the SAFE Banking Act, standalone legislation introduced in 2019 that would prevent federal regulators from punishing financial institutions that offer banking services, such as checking accounts, to state-legal cannabis businesses.
House members approved the cannabis banking bill on a bipartisan vote in September. The bill has since stalled in the Senate Banking Committee.
Republicans say including cannabis banking provisions in the HEROES Act is the definition of “pork.”
“If you read that bill, it mentioned cannabis more than it ever mentioned jobs,” House Minority Leader Kevin McCarthy, R-Calif., told CNBC Tuesday. “Much of that bill was about legislation that Democrats have wished and tried to pass in the House long before COVID ever came around.”
Even some cannabis industry insiders who want banking access questioned including it in a bill focused on coronavirus relief.
“Placing this initiative inside a $3 trillion spending package only distracts from the true spending that is needed to help people and highlights how appalling these irresponsible spending sprees are becoming from both sides of the aisle,” said Michael Sassano, founder of Solaris Farms, which is one of the largest cannabis cultivators in Nevada.
But political media strategist and industry advocate Shawna Vercher said cannabis businesses have been subjected to predatory lending and expensive banking workarounds for years. Now, she said, handling cash just isn’t safe for workers or customers.
Don Murphy, director of federal policies at the Marijuana Policy Project, which advocates for cannabis policy reform, said banks are asking for this policy change even more than cannabis companies.
The letter from Becerra and his fellow attorneys general argues that opening banking access isn’t an endorsement of legal marijuana, but “a recognition of the realities on the ground and an embrace of our federalist system of government that is flexible enough to accommodate divergent state approaches.”
A battle over the banking policy looks to be at least a couple weeks off. Senate leaders told reporters Tuesday that they’re in no rush to consider any further stimulus funding.
