Congress urged to open banking to pot trade

LOS ANGELES — Bank officials and others on Wednesday urged Congress to fully open the doors of the U.S. banking system to the legal marijuana industry, a change that supporters say would reduce crime risks and resolve an array of challenges for cannabis companies, from paying taxes to getting a loan.

Most Americans live in states where marijuana is legally available in some form. But there’s a problem when it comes to banks: Most don’t want anything to do with money from the cannabis industry for fear it could expose them to legal trouble from the federal government, which still considers marijuana illegal.

That conflict has left many growers and sellers in the burgeoning pot industry in a legal dilemma, shutting them out of everyday financial services like opening bank accounts or obtaining credit cards. It also has forced many businesses to operate only in cash — sometimes vast amounts — making them ripe targets for crime.

The House Financial Services subcommittee took up proposed legislation, the Secure and Fair Enforcement Banking Act of 2019 that would protect banks and their employees from punishment for providing services to cannabis businesses that are legal on a state level.

California Treasurer Fiona Ma, whose state is home to the nation’s largest legal pot market, called the measure a critical step for the rapidly expanding industry.

But others had concerns. Rep. Blaine Luetkemeyer, R-Mo., said the proposal would create confusion while marijuana remains illegal at the federal level. He questioned how banks would identify criminal operators and pointed to how Congress handled hemp, the low-THC cousin of the cannabis plant, which was removed from the list of federally controlled substances.

With the banking legislation, “we are putting the cart before the horse,” he said.

The marijuana business has received sometimes unexpected political support in recent years. Former House speaker John Boehner was once staunchly against the legalization of marijuana but is now heading up a procannabis lobbying group. In 2017, Sen. Cory Booker, D-N.J., sponsored a legalization bill that included expunging federal marijuana convictions.

But that type of support may not be enough to move Congress on the issue. “There are a lot of dangers associated with cannabis,” Jonathan Talcott, chairman of Smart Approaches to Marijuana, a nonprofit that opposes legalization, told the committee.

Legalization advocates have reason to celebrate that the hearing took place before the Consumer Protection and Financial Institutions Subcommittee. The proposal, or similar versions, have languished in the past.