Both the Senate and House of Representatives bills are bipartisan and are aimed at protecting banks and other financial institutions from federal prosecution when working with cannabis-related businesses that are operating in compliance with state laws.
Should the bills pass, the legislation would prohibit federal regulators from sanctioning banks for working with state-compliant cannabis businesses or terminating their services.
Even more important, the legislation would allow legal cannabis businesses to open bank accounts, write checks and take customers’ credit cards – doing away with cash-only transactions and money being transported around in buckets – according to the general counsel for Golden Bear Insurance Company.
U.S. Sen. Robert Menendez, D-N.J., who introduced the Senate bill along with 21 other senators of both parties said New Jersey already had medical marijuana businesses in the state. Menendez is also a member of the Senate Banking Committee with jurisdiction over the issue.
“What they don’t have are bank services to pay employees, take credit cards, write checks or pay taxes,” he said. “Instead, they’re forced to operate entirely in cash—large sums—an open invitation for robbery and crime.”
Another consideration is the insurance industry. And Menendez is also getting ready to introduce legislation that would allow insurance companies to provide services to legal marijuana businesses.
Robert Easton, the deputy general counsel, and chief compliance officer of insurance company Marsh LLC, spoke at a New York City Bar Association panel on Friday. He said, “There is a lot of confusion about what’s going on in the cannabis space. The confusion stems from the fact that we have a federalist system.”
And because cannabis production, sales, and possession are still illegal under federal law, this has led to a lot of confusion in the insurance and banking industry. As a matter of fact, some financial institutions are even uncertain when it comes to hemp growers.
Jonathan A. Havens, a partner at Saul Ewing, Arnstein & Lehr LLP, said that his clients who run hemp businesses still struggle to secure banking services and insurance coverage. Havens says that even though hemp production is now legal, owing to the Farm Bill, many farmers are still struggling to get financial backing.
“The consequences of that is that cannabis-related businesses end up trafficking a lot in cash,” said Easton, adding, “Cash is often a means for engaging in money-laundering activities.”
