Legal Brief: Lawmakers Seek to Address Marijuana Banking Gap

By Laura Cruz, legal editor

Editor’s note: In the second installment of our new series, the legal team covers recent attempts by U.S. federal and state legislators to facilitate the provision of financial services to state-licensed marijuana-related businesses, or MRBs.

With at least 34 states, the District of Columbia and several U.S. territories now licensing the production and distribution of recreational or medicinal marijuana, interest in a legislative fix that would allow financial institutions to hold accounts for MRBs without exposing themselves to federal regulatory or legal action has increased.

U.S. lawmakers have introduced several bills to remove the impasse, including multiple versions of the Secure and Fair Enforcement Banking Act, which, among other prohibitions, would bar regulators from terminating or limiting insurance to depository institutions solely for serving MRBs.

Rather than address the issue of cannabis-related banking directly, a bill introduced in March 2017 by Rep. Jaren Polis (D-CO), the Regulate Marijuana Like Alcohol Act, would remove marijuana from federal schedules of controlled substances and relocate supervision of MRBs to the Bureau of Alcohol, Tobacco, Firearms and Explosives.

Rep. Earl Blumenauer (D-OR), co-chair of the Congressional Cannabis Caucus, introduced an updated version of the bill at the turn of the year.

The Marijuana Justice Act, which Sen. Cory Booker (D-NJ) introduced in August 2017, would also remove marijuana from the CSA, while an alternative proposal that he and Sen. Elizabeth Warren (D-MA) pitched last year, the Strengthening the Tenth Amendment Through Entrusting States Act, or STATES Act, would amend the law to allow states to regulate marijuana.

Which, if any, of the proposals have gained traction with Congress is unclear, raising the likelihood that legal and regulatory relief for MRBs will have to spring from elsewhere.

A number of bills have been tabled in states that have licensed MRBs aim to provide a path for financial institutions to handle marijuana proceeds without fear of punitive action.

In October 2018, New Jersey state lawmakers John McKeon and Pamela Lampitt introduced legislation that would establish a state bank for handling marijuana-related funds.

Under the proposed bill, A4510, banks could make loans and accept deposits from MRBs, including manufacturers of marijuana, as well as individuals whose businesses involve the handling of marijuana or marijuana-related products.

SB930, California state Sen. Bob Hertzberg’s plan to establish limited state-chartered banks and credit unions for MRBs via a new statute, the Cannabis Limited Charter Banking and Credit Union Law, stalled in committee last year, but lawmakers are set to consider an updated version as soon as Thursday.

In August 2018, the Washington State Department of Financial Institutions and regulators from 13 other states, including Montana, New York, Oregon, Oklahoma, Pennsylvania, Alaska and Michigan, penned a letter to federal lawmakers urging legislation that would provide safe harbor to financial institutions serving state-licensed MRBs.

The Massachusetts Division of Banks and other state agencies reiterated those calls in April.

Three months earlier, in testimony to the House Financial Services Committee, representatives from the Independent Community Banks of America, the Credit Union National Association, a Washington, D.C.-based marijuana grower and several nonprofits emphasized the challenges facing MRBs and financial institutions.

Lastly, on May 8 of this year, a coalition of 38 state attorneys general called on Congress to adopt the SAFE Banking Act to allow states and territories that have legalized certain uses of marijuana to bring that commerce into the banking system.

“Not incorporating an $8.3 billion industry into our banking system is hurting our public safety and economy,” California Attorney General Xavier Becerra wrote. “When it comes to the cannabis industry, California has made clear that it is moving forward and our nation should do the same.”

Amid the dearth of federal action, credit unions in several states, including Massachusetts and Alaska, have already launched pilot programs for MRBs seeking to keep their money safe, according to the American Bar Association.

Contact Laura Cruz at

Topics : Anti-money laundering
Source: U.S.: Congress , U.S.: State Legislature , U.S.: State Attorneys General , U.S.: State Financial Regulators
Document Date: May 15, 2019