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Congress can fix legal marijuana business banking problem

Businesses in the legal marijuana industry are prime targets for robbery because they often operate on a cash-only basis. Government is to blame for that.

Congress can fix legal marijuana business banking problem
Congress can fix legal marijuana business banking problem

ANALYSIS/OPINION:

Violent and property crime rates have decreased over the past 25 years, so it’s telling that instances of robbery or burglary against one sort of business seem to be on the rise — legal marijuana businesses. Just last month there was a robbery at a marijuana dispensary in Ann Arbor, Michigan, that almost turned deadly after three assailants robbed the store at gunpoint and then fired at an employee when he pursued.

Unfortunately, instances like these are far too common. The Wharton School of Business Public Policy Initiative found that one in every two marijuana dispensaries have been robbed — with thieves making away with $20,000 to $50,000 of cash or merchandise, on average.

Businesses in the legal marijuana industry are prime targets for robbery because they often operate on a cash-only basis. Government is to blame for that. Although a majority of states have legalized marijuana, the federal government still has anti-cannabis laws on the books. So banks and credit unions can run afoul of criminal statutes such as aiding, abetting or acting as an accessory to crime if they offer services to these businesses.

That is a shocking limitation considering marijuana is now a major industry that’s been legalized in multiple states. In 2018, the legal marijuana industry grew to $10.4 billion and now employs more than 210,000 Americans. Yet recent research shows only 30 percent of marijuana businesses reported having a bank, and less than 500 banks or credit unions have active operating accounts for such businesses.

Congress has made some start toward fixing the problem. In October, in an overwhelmingly bipartisan vote of 321-103, the House passed H.R. 1595, the Secure and Fair Enforcement Banking Act (SAFE Banking Act), to provide safe harbor protections for banks and credit unions doing business with the legal marijuana industry.

These protections would apply to any licensed marijuana business that’s engaged in manufacturing, growing or producing, as well as those which handle, sell, transport, display or distribute such products. The legislation even extends the protections to ancillary businesses, such as real estate owners, accountants, plumbers and electricians who provide non-bank services but face similar challenges.

Earlier this year, 38 state attorneys general signed a letter backing the bill, and at the federal level both Attorney General William Barr and Treasury Secretary Steven Mnuchin have expressed support for reforming the laws around marijuana banking.

Moreover, the bill has wide support from industry trade associations, including the American Bankers Association, the Independent Community Bankers of America and the Credit Union National Association. Public policy organizations have banded together to urge the Senate to take up the legislation, too.

But even with such board support, 33 Senate cosponsors and a hearing in March, the SAFE Banking Act has yet to even make it out of the Senate Banking Committee. While on the record, Chairman Mike Crapo, Idaho Republican, bluntly warned, “The impact on the ability of small and large businesses to operate justifies our attention.” So now it’s high time to schedule a committee vote on the bill, while rejecting amendments to water down the bill or further regulate the vaping industry.

It’s time for the federal government to step aside to let states, consumers, businesses and lending institutions make the decisions that best meet their needs.

• Matthew Adams is a policy analyst for the Competitive Enterprise Institute, a free market public policy organization in Washington, D.C.