Senate Ought To Follow The Call Of 50 State Bankers Associations Asking To Service Cannabis Industry

Senate Ought To Follow The Call Of 50 State Bankers Associations Asking To Service Cannabis Industry

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State bankers associations from all 50 states and Puerto Rico recently signed a letter imploring the U.S. Senate Banking Committee to hold hearings on the merits of banking cannabis-related businesses. This move comes after 38 state or territory attorneys general and 17 state treasurers made similar requests earlier this month. The letter was a blip in the news cycle, but its significance should not be overlooked.

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According to New Frontier Data, an analytics firm specializing in the cannabis industry, cannabis sales are projected to reach almost $13 billion in2019 In a report released just last week, the Brightfield Group, a predictive analytics and market research firm for the cannabis industry, projected that the U.S. cannabis market will reach $22.7 billion in sales by 2023 – a staggering amount of growth in such a short time period. And remember, the majority of that business is done in cash.

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Some local financial institutions, specifically state credit unions, provide services to the industry. The federal banks that the majority of American businesses use, however, are still prohibited from working with the cannabis sector. That means that every payday, most industry employees receive an envelope of cash in lieu of a paycheck. Landlords, utility companies, and vendors also have to be paid in cash in most situations. This represents a big safety issue, as well as a dilemma for revenue collection and transparency. As the bankers’ groups note, cannabis businesses “must remit payments for state taxes and licensing fees in cash,” which “significantly increases state compliance auditing costs, since operating on an all-cash basis leaves no paper trails for auditors to follow.”

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Despite the industry’s expansion and mounting social acceptance of cannabis, the reality remains that banking cannabis-related businesses is a federal crime. While cannabis is legal in some form in 33 states, either medicinal or recreational, it remains illegal at the federal level. Therefore, banking the revenues from cannabis transactions could be considered money laundering, making banks and financial institutions hesitant to take on cannabis clients for fear of prosecution. Those that do bank cannabis businesses operate under a cloud of uncertainty, and without federal action to remove the federal prohibition, that cloud will remain.

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Note that the associations do not take a position on legalization – that isn’t their battle. Federal legalization is a related but separate issue. Instead, they argue that leaving an industry unbanked “presents serious public safety, revenue administration, and legal compliance concerns” and call on Congress to finally take action to find a solution.

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There are two important takeaways from this letter.

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First, bankers’ associations in all fifty states and Puerto Rico are presenting a united front, whether cannabis is legal in their home state or not. Even though cannabis use in some form is now permitted in states comprising 68 percent of the American population, there are still 17 states where it remains completely prohibited.

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Bankers in those states, however, recognize that barring cannabis businesses from the financial services system will eventually impact them. Even if their states are a long way off from seeing their first dispensary or retail store open up, they want the issue resolved so they can have a cut of the business when they do.

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The second important element of the letter is the inclusion of the Idaho Bankers Association as a signatory. While Idaho may have a small population compared to other states, any changes to federal banking policy will go through Idaho’s home state senator, Michael Crapo, who chairs the Senate Banking Committee.

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Thus far, Senator Crapo has said he would not commit to bringing the House-passed SAFE Banking Act before his committee. The SAFE Banking Act would protect banks and credit unions that service cannabis companies from legal penalties. Observers of the committee and the industry may have viewed those comments as a signal that the SAFE Banking Act could die on the vine before ever seeing President Trump’s desk this Congress. In Idaho, cannabis is illegal for both recreational and medicinal use, which means banks in Senator Crapo’s state are not directly affected (yet). But with this letter, the Idaho Bankers Association may have helped breathe some new life into the bill.

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Had Idaho’s bankers come out strictly opposed to these changes, the outlook for the SAFE Banking Act would have been bleaker – at least for as long as Senator Crapo remains at the helm of the Banking Committee. But with the banking industry in his state voicing support, he may have the political cover needed to reconsider his position.

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As long as these businesses are allowed to operate at the state level, the revenues they generate are going to enter the banking system at some point – whether it’s an employee, utility company, landlord, vendor, or other entity that makes a cash deposit into their non-cannabis account. Banks understand that it’s long past time to remove the uncertainty and its associated risks. Now, it’s time for Congress to follow their lead.

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State bankers associations from all50 states and Puerto Rico just recently signed a letter imploring the U.S. Senate Banking Committee to hold hearings on the merits of banking cannabis-related services. This move comes after 38 state or area chief law officers and 17 state treasurersmade comparable demands earlier this month. The letter was a blip in the news cycle, however its significance should not be neglected.

According to New Frontier Data, an analytics firm focusing on the cannabis industry, cannabis sales are projected to reach nearly$13 billion in2019 In a report launched just recently, the Brightfield Group, a predictive analytics and market research study firm for the cannabis industry, forecasted that the U.S. cannabis market will reach$227 billion in sales by2023– an incredible amount of development in such a short time period. And keep in mind, the bulk of that service is carried out in money.

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Some local financial institutions, particularly state cooperative credit union, offer services to the market. The federal banks that the bulk of American services use, however, are still restricted from working with the cannabis sector. That indicates that every payday, many market workers receive an envelope of money in lieu of an income. Landlords, energy companies, and suppliers likewise need to be paid in money in most circumstances. This represents a big security concern, in addition to a problem for profits collection and openness. As the bankers’ groups keep in mind, cannabis companies “must remit payments for state taxes and licensing fees in money,” which “significantly increases state compliance auditing costs, because operating on an all-cash basis leaves no paper routes for auditors to follow.”

In spite of the market’s growth and installing social acceptance of marijuana, the truth stays that banking cannabis-related services is a federal criminal activity. While marijuana is legal in some form in 33 states, either medical or recreational, it remains prohibited at the federal level. For that reason, banking the profits from marijuana deals could be thought about money laundering, making banks and financial organizations hesitant to take on marijuana clients for fear of prosecution. Those that do bank marijuana organisations operate under a cloud of unpredictability, and without federal action to eliminate the federal restriction, that cloud will remain.

Keep in mind that the associations do not take a position on legalization– that isn’t their battle. Federal legalization is a related but separate concern. Rather, they argue that leaving an industry unbanked “presents serious public security, earnings administration, and legal compliance issues” and call on Congress to finally do something about it to discover a solution.

There are 2 essential takeaways from this letter.

.

Initially, lenders’ associations in all fifty states and Puerto Rico are presenting a joined front, whether cannabis is legal in their home state or not. Although cannabis usage in some type is now permitted in states comprising 68 percent of the American population, there are still 17 states where it stays totally forbidden.

Bankers in those states, however, recognize that barring cannabis organisations from the monetary services system will eventually affect them. Even if their states are a long way off from seeing their very first dispensary or retailer open, they desire the problem resolved so they can have a cut of the organisation when they do.

The second important element of the letter is the addition of the Idaho Bankers Association as a signatory. While Idaho might have a little population compared to other states, any modifications to federal banking policy will go through Idaho’s house state senator, Michael Crapo, who chairs the Senate Banking Committee.

Therefore far, Senator Crapo has actually said he would not dedicate to bringing the House-passed SAFE Banking Act prior to his committee. The SAFE Banking Act would safeguard banks and cooperative credit union that service marijuana business from legal penalties. Observers of the committee and the industry may have seen those comments as a signal that the SAFE Banking Act might pass away on the vine before ever seeing President Trump’s desk this Congress. In Idaho, cannabis is prohibited for both recreational and medical usage, which implies banks in Senator Crapo’s state are not straight affected (yet). However with this letter, the Idaho Bankers Association might have assisted breathe some new life into the expense.

Had Idaho’s bankers come out strictly opposed to these changes, the outlook for the SAFE Banking Act would have been bleaker– at least for as long as Senator Crapo stays at the helm of the Banking Committee. However with the banking market in his state voicing support, he may have the political cover required to reassess his position.

As long as these organisations are enabled to run at the state level, the revenues they generate are going to enter the banking system at some point– whether it’s a worker, utility business, property owner, vendor, or other entity that makes a cash deposit into their non-cannabis account. Banks understand that it’s long previous time to eliminate the unpredictability and its involved dangers. Now, it’s time for Congress to follow their lead.

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State bankers associations from all50 states and Puerto Rico recently signed a letter urging the U.S. Senate Banking Committee to hold hearings on the benefits of banking cannabis-related companies. This relocation comes after38 state or area chief law officers and 17 state treasurers made similar requests earlier this month.
The letter was a blip in the news cycle, but its significance needs to not be ignored.

According to New Frontier Data , an analytics firm focusing on the marijuana market, marijuana sales are forecasted to reach nearly $ 13 billion in2019 In a report launched just recently, the Brightfield Group, a predictive analytics and marketing research company for the cannabis industry, projected that the U.S. cannabis market will reach $ 22.7 billion in sales by 2023– a shocking amount of development in such a short time duration. And remember, the majority of that service is performed in money.

Some regional monetary institutions, particularly state credit unions, provide services to the market. The federal banks that most of American services use, however, are still forbidden from dealing with the marijuana sector. That implies that every payday, most industry staff members receive an envelope of money in lieu of an income. Landlords, energy companies, and vendors also need to be paid in money in the majority of scenarios. This represents a huge security concern, along with a dilemma for income collection and transparency. As the bankers’ groups keep in mind, marijuana businesses “must remit payments for state taxes and licensing charges in money,” which “significantly increases state compliance auditing expenses, given that operating on an all-cash basis leaves no paper routes for auditors to follow.”

Despite the market’s growth and installing social approval of cannabis, the reality remains that banking cannabis-related companies is a federal criminal activity. While marijuana is legal in some type in 33 states, either medicinal or recreational, it remains unlawful at the federal level. For that reason, banking the incomes from cannabis transactions might be considered money laundering, making banks and banks hesitant to handle marijuana customers for fear of prosecution. Those that do bank marijuana businesses operate under a cloud of unpredictability, and without federal action to eliminate the federal restriction, that cloud will remain.

Note that the associations do not take a position on legalization– that isn’t their battle. Federal legalization is a related but different problem. Rather, they argue that leaving a market unbanked “presents major public safety, revenue administration, and legal compliance issues” and get in touch with Congress to finally take action to find an option.

There are 2 important takeaways from this letter.

Initially, bankers’ associations in all fifty states and Puerto Rico exist a joined front, whether marijuana is legal in their house state or not. Despite the fact that cannabis use in some kind is now allowed in states comprising 68 percent of the American population, there are still 17 states where it stays totally restricted.

Bankers in those states, however, recognize that disallowing marijuana businesses from the monetary services system will eventually affect them. Even if their states are a long way off from seeing their first dispensary or retailer open up, they desire the problem fixed so they can have a cut of business when they do.

The second important element of the letter is the addition of the Idaho Bankers Association as a signatory. While Idaho may have a little population compared to other states, any changes to federal banking policy will go through Idaho’s house state senator, Michael Crapo, who chairs the Senate Banking Committee.

So far, Senator Crapo has actually said he would not dedicate to bringing the House-passed SAFE Banking Act before his committee. The SAFE Banking Act would safeguard banks and cooperative credit union that service cannabis business from legal penalties. Observers of the committee and the market may have viewed those comments as a signal that the SAFE Banking Act might pass away on the vine before ever seeing President Trump’s desk this Congress. In Idaho, marijuana is prohibited for both leisure and medical use, which suggests banks in Senator Crapo’s state are not straight impacted (yet). However with this letter, the Idaho Bankers Association might have assisted breathe some brand-new life into the costs.

Had Idaho’s lenders come out strictly opposed to these modifications, the outlook for the SAFE Banking Act would have been bleaker– a minimum of for as long as Senator Crapo remains at the helm of the Banking Committee. But with the banking industry in his state voicing assistance, he may have the political cover required to reconsider his position.

As long as these services are permitted to operate at the state level, the revenues they create are going to get in the banking system at some point– whether it’s an employee, utility company, landlord, supplier, or other entity that makes a cash deposit into their non-cannabis account. Banks understand that it’s long past time to eliminate the uncertainty and its involved risks. Now, it’s time for Congress to follow their lead.

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