American Congress Holds Hearing on Access to Banking Services by Marijuana Companies

American Congress Holds Hearing on Access to Banking Services by Marijuana Companies
February 23 15:09 2019 Print This Article

More than 30 states have legalized the use of marijuana for some certain use, whether recreational or medical; in fact, the number currently stands at 32 states. More states are on the way to adopting cannabis use, and Illinois is at the top of that list today.

Illinois has a bill on the floor of the Senate to legalize the recreational use of marijuana.

The likelihood of this bill being passed went higher in November 2018 when J.B Pritzker, who is a proponent of the bill, was elected governor. We are seeing more Democratic dominance of legislative chambers and this has created a more conducive atmosphere for the cannabis bill to be passed.

The legalization and regulation of recreational marijuana has favored the economic growth in states where it has been adopted. Michigan was the first Midwestern state to legalize the use of marijuana, and Illinois seems to be next in line. The Illinois cannabis bill has a lot of support from the state legislature, and many are confident it will go through. Pat Brady, the former chairman of the Illinois Republican Party, said that he thinks it’s a “done deal”. Brady is a consultant a lobbyist who was at the forefront in helping NuMed medical cannabis producers acquire 3 medical marijuana dispensary licenses.

In Healthcare News, it is reported that Illinois will allow the legal use of medical cannabis for certain health conditions; but, marijuana still cannot be used for recreation. Although marijuana use for conditions has been legalized, it is still impossible to legally purchase it in the state which beats the whole idea of legalizing its use. Businesses require licenses and a legal go-ahead to sell cannabis in the state. Colorado and Washington were the first states to legalize recreational marijuana use in 2012 and many states followed suit.

Access to Banking Services by Marijuana Companies

Although many states have legalized the medical or recreational use of marijuana, federal laws still prohibit the use. This has made it impossible for banks to serve companies that commercially sell cannabis. A House Financial Services subcommittee will hold a hearing where they will look into the accessibility of banking services for cannabis-related businesses. Democratic Congressman Gregory Meeks who is also the chairman of the Consumer Protection and Financial Institutions subcommittee said that they are looking into how out-of-date banking regulations on a federal level are obstructing restructuring on the state level in the case of marijuana.

The American Bankers Association says that unless congressional action is taken, most of the financial institutions will not take the legal, regulatory, and reputational risk associated with banking cannabis-related businesses.

On Wednesday the subcommittee is set to discuss the Secure and Fair Enforcement Banking Act of 2019 (SAFE Banking Act). Ed Perlmutter, Democratic Rep. of Colorado introduced a version of the bill in 2018 and will be testifying before the committee during the discussion. This draft of the bill would prevent federal banking regulators from penalizing, prohibiting, or discouraging depository institutions from providing banking services to state-authorized cannabis-related businesses.

Republican Congressman Blaine Luetkemeyer of Missouri is the ranking member of the subcommittee and although he does not support decriminalization of cannabis, he said that federal marijuana laws need to be enforced or changed before they can begin to address the banking services portion of it. Others who will stand before the subcommittee on Monday include California State Treasurer, Law Enforcement Action Partnership Law Enforcement Action Partnership, and State Bank Northwest CEO.

As states like Illinois pursue the legalization of recreational marijuana, an amendment to the federal laws regarding marijuana use and access of related businesses to banking services will likely boost the economic state in these states.

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