On Thursday, June 16th, the Senate Appropriations Committee approved an amendment that prohibits federal funds from being used to prosecute banks that host accounts for cannabis businesses. This is a major step forward for a legitimate cannabis industry.
The measure was narrowly approved by a 16-14 vote, which was swayed by three Republican senators affirming the decision. The amendment is attached to the Appropriations Act for Fiscal Year 2017, which heads to the Senate floor for review. The purpose of the amendment is to resolve dangerous issues that have plagued the cash-only cannabis industry.
Financial institutions have been apprehensive about accepting cannabis business deposits as current policy continues to threaten banks with the loss of federal accreditation. The language approved by the Senate Appropriations Committee states:
“None of the funds made available in this Act may be used, with respect to a State or jurisdiction where marijuana is legal, to prohibit or penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, producer, or a person that participates in any business or organized activity that:
- involves handling marijuana or marijuana products; and
- engages in such activity pursuant to and compliant with a law established by a State or a unit of local government.”
Banking has long been a prohibitive factor for businesses trying to operate in a safe and compliant manner. Even in states where cannabis has been recreationally legal for a number of years, businesses still do not have safe banking options, leaving them susceptible to robberies and other run-ins with organized crime.
In 2014, the Justice Department and the Financial Crimes Enforcement Network (FinCEN) released a joint statement that said law enforcement authorities would no longer prioritize penalizing financial institutions that work with cannabis companies.
The majority of financial institutions were not impressed with these loose promises of protections, and are waiting until their are firm federal standards in place that allow them to operate in full compliance.