Treasury Secretary Steven Mnuchin told lawmakers on Wednesday that the cash-only nature of the cannabis industry “creates significant problems” for the Internal Revenue Service and “creates risk” for IRS employees and “people in the community,” according to a report from The Hill.
During his testimony to the House Appropriations subcommittee, Mnuchin didn’t take a stance on the issue of cannabis banking at large but said the Treasury Department “has limited abilities” within the guidance from the agency’s Financial Crimes Enforcement Network (FinCEN) “to direct” the issue. Mnuchin urged lawmakers to “deal with” the issue “one way or another.”
“We have to build cash rooms to take in large amounts of cash where people owe us taxes, because we want to collect the taxes, and those entities are not banked.” – Mnuchin, in remarks to the House Appropriations subcommittee, Mar. 4, 2020, via The Hill
The 2014 policy guideline from FinCEN provides a pathway for cannabis operators in legal states to access traditional financial services but it’s largely at the discretion of the service providers.
In 2018, the agency reported more than 300 banks and about 100 credit unions were providing services to the space, but FinCEN’s rules were muddied by former Attorney General Jeff Sessions, who rescinded the Cole Memo, which had protected state-legal cannabis businesses from federal interference. Following the move by Sessions, FinCEN said their 2014 guidance remained in place; however, most banks, credit unions, and credit card processors still refuse to serve the industry.
Last September, House lawmakers passed the SAFE Banking Act, which would explicitly allow cannabusinesses access to financial services; however, that measure has not been voted on by the Republican-controlled Senate. Sen. Mike Crapo (R), the chair of the chamber’s Banking, Housing, and Urban Affairs Committee, does not support the legislation.
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