Proposed U.S. Senate Bill Would Grant Marijuana Businesses Bank Access

A bill that would grant banking access to legal marijuana businesses has been introduced in the U.S. Senate, paving the way for companies in marijuana-legal states to work with financial institutions.

The Marijuana Businesses Access to Banking Act of 2015, proposed by Colorado senators Michael Bennet (D) and Cory Gardner (R) would prevent criminal prosecution, asset forfeiture and liability for banks that choose to work with legitimate marijuana businesses that operate in states where the drug is legal. The bi-partisan bill carries six co-sponsors including senators Rand Paul (R-KY) and Elizabeth Warren (D-MA). Neither Paul nor Warren represent states where the drug is currently legal for recreational use.

The bill (S.1726) would prohibit federal banking regulators from penalizing or discouraging banks from providing services to legitimate state-sanctioned and regulated marijuana businesses, terminating or limiting the federal deposit insurance of banks that choose to work with legitimate marijuana businesses, recommending or providing incentives to stop banks from doing business with marijuana businesses; or taking punitive actions on loans to owners of marijuana businesses, according to the bill text.

The bill does give banks the right to refuse financial services to marijuana businesses if they choose.

“Ever since Colorado voters approved the legalization of recreational marijuana, conflicting federal and state marijuana laws have required banks to refuse basic financial services to marijuana-related businesses in Colorado. In turn, this has forced the industry to adopt an all-cash business model that fosters violent crime and puts all Coloradans at risk,” Gardner said in a statement. “This commonsense legislation solves a major public safety problem in my state by giving legitimate businesses acting in compliance with state laws access to the banking system.”

Last February the Justice and Treasury Departments released guidelines for banks that choose to do business with cannabusinesses but those guidelines did not properly protect banks from the penalties for dealing with the cannabis industry, which is still federally illegal. The guidelines also failed to provide a framework by which marijuana businesses can accept credit cards or write checks.

Dr. Mitch Earleywine, chair of the National Organization for the Reform of Marijuana Laws, said in an email that allowing businesses access to financial institutions “will undoubtedly encourage other states to pass comparable [legalization] laws” by providing a framework in which the industry can operate legally and safely.

“Legitimate businesses simply want to function properly so they can pay their taxes, employees, and suppliers by having bank accounts. It’s absurd to expect any business to have to pay cash because banks are too frightened to give them an account,” he said. “Forcing these entrepreneurs to have so much cash on hand leaves them dangerously open to robbery, and paying taxes with a giant cash deposit is awkward and embarrassing.”

Earleywine noted that Colorado schools are receiving millions of dollars thanks to the state’s taxed and regulated marijuana market, and law enforcement officers can “devote their time to serious crimes instead of petty cannabis busts.”

In 2010 the Denver Police Department released an analysis of the rate at which pot shops were robbed, finding the 16.8 percent robbery rate was on par with that of pharmacies in the state. However, unlike pharmacies, dispensaries tend to keep a large amount of cash on hand due to their inability to access banking services.

“Since the legalization of both medical and recreational marijuana in Colorado, businesses across the state have lacked access to basic banking services,” Bennet said in a statement. “This has raised significant public safety concerns for both employees and customers of these businesses. It’s also created compliance and oversight challenges. This bill helps address those issues by allowing our banking system to serve these legal businesses like any others.”

The bill has been referred to the Senate Committee on Banking, Housing and Urban Affairs which is chaired by Sen. Richard Shelby (R-AL). Shelby is firmly against marijuana legalization and in 1999 voted to increase the penalties for those convicted of drug-related crimes.

Photo Credit: Ron Cogswell

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