Cannabis-Friendly Credit Union

Cannabis-friendly credit unions should be a redundant statement in Canada. After all, in Canada, cannabis is legal. British Columbia contributes over $2 billion annually. All financial institutions, whether big banks or smaller credit unions should be cannabis-friendly. Sadly, this is not the case. Because cannabis is illegal in the US, Canadian banks and large credit […]

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Majority of Americans Want Congress to Act on Cannabis Banking

According to data collected in a national survey, released March 8, conducted by Morning Consult, and on behalf of the American Bankers Association, the majority of Americans want Congress to get the ball rolling with cannabis banking reform. 

Lack of banking access forces cannabis businesses to deal in cash—which has proven to be exceedingly reckless. A dangerous pattern of robberies formed in certain states related to cannabis, money, and how the two intersect. 

The survey data suggests that the majority of Americans are satisfied with their bank account, but the survey also questioned participants about their views on allowing cannabis businesses to have access to banking institutions and whether that should be allowed. 

The survey examined consumer views on cannabis banking. A strong majority of American adults—65 percent—support allowing cannabis businesses to access banking services such as checking accounts and business loans in states where cannabis is legal, while only 15 percent oppose. Furthermore, 68 percent of Americans said that Congress should pass legislation so that cannabis businesses can “access banking services and products in states” where it is legal.

Seven in 10 support Congress passing legislation that allows cannabis businesses to access banking services such as checking accounts and business loans, at least in states where cannabis is legal. In many of those states, the businesses still deal in cash. 

“Consumers clearly agree that now is the time to resolve the ongoing conflict between state and federal law so banks can serve legal cannabis and cannabis-related businesses,” said Rob Nichols, ABA president and CEO. “Doing so will help banks meet the needs of their communities while enhancing public safety, increasing the efficiency of tax collections and improving the financial transparency of the cannabis industry.”

Leaders from NORML applauded the new batch of data, particularly for the survey’s inclusion of people’s views on cannabis businesses.

“Americans understand that no industry can operate safely, transparently or effectively without access to banks or other financial institutions and it is self-evident that this industry, and those consumers that are served by it, remain severely hampered without this access,” NORML’s Deputy Director Paul Armentano said, commenting on the polling data. “It is also clear that the status quo is actively hurting small businesses and creating unnecessary barriers to entry for entrepreneurs from those communities that have been disproportionately impacted by decades of cannabis prohibition. In order to truly bring the marijuana industry out of the shadows, actions need to be taken by Congress to repeal these outdated and discriminatory practices.”

According to recent data from the U.S. Treasury Department, only about 11 percent of all U.S. banks and about four percent of all U.S. credit unions are providing banking services to cannabis-related businesses.

In early February, the House of Representatives passed the SAFE Banking Act as part of a separate bill—marking the sixth time the lower chamber of Congress has passed the legislation to grant cannabis businesses access to banking and other financial services.

Members of the House adopted provisions of the banking bill as an amendment to legislation drafted to support U.S. manufacturing and improve competitiveness with China known as the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act of 2022 (America COMPETES Act of 2022).

NORML cited survey data compiled earlier this year by Whitney Economics. That survey reported that over 70 percent of cannabis businesses say that the lack of access to banking services or investment capital is their top challenge. While 42 percent of respondents cited state regulations as the most significant burden facing the industry, only 39 percent cited the influence of the black market.

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Majority of Americans Want Congress to Act on Cannabis Banking

According to data collected in a national survey, released March 8, conducted by Morning Consult, and on behalf of the American Bankers Association, the majority of Americans want Congress to get the ball rolling with cannabis banking reform. 

Lack of banking access forces cannabis businesses to deal in cash—which has proven to be exceedingly reckless. A dangerous pattern of robberies formed in certain states related to cannabis, money, and how the two intersect. 

The survey data suggests that the majority of Americans are satisfied with their bank account, but the survey also questioned participants about their views on allowing cannabis businesses to have access to banking institutions and whether that should be allowed. 

The survey examined consumer views on cannabis banking. A strong majority of American adults—65 percent—support allowing cannabis businesses to access banking services such as checking accounts and business loans in states where cannabis is legal, while only 15 percent oppose. Furthermore, 68 percent of Americans said that Congress should pass legislation so that cannabis businesses can “access banking services and products in states” where it is legal.

Seven in 10 support Congress passing legislation that allows cannabis businesses to access banking services such as checking accounts and business loans, at least in states where cannabis is legal. In many of those states, the businesses still deal in cash. 

“Consumers clearly agree that now is the time to resolve the ongoing conflict between state and federal law so banks can serve legal cannabis and cannabis-related businesses,” said Rob Nichols, ABA president and CEO. “Doing so will help banks meet the needs of their communities while enhancing public safety, increasing the efficiency of tax collections and improving the financial transparency of the cannabis industry.”

Leaders from NORML applauded the new batch of data, particularly for the survey’s inclusion of people’s views on cannabis businesses.

“Americans understand that no industry can operate safely, transparently or effectively without access to banks or other financial institutions and it is self-evident that this industry, and those consumers that are served by it, remain severely hampered without this access,” NORML’s Deputy Director Paul Armentano said, commenting on the polling data. “It is also clear that the status quo is actively hurting small businesses and creating unnecessary barriers to entry for entrepreneurs from those communities that have been disproportionately impacted by decades of cannabis prohibition. In order to truly bring the marijuana industry out of the shadows, actions need to be taken by Congress to repeal these outdated and discriminatory practices.”

According to recent data from the U.S. Treasury Department, only about 11 percent of all U.S. banks and about four percent of all U.S. credit unions are providing banking services to cannabis-related businesses.

In early February, the House of Representatives passed the SAFE Banking Act as part of a separate bill—marking the sixth time the lower chamber of Congress has passed the legislation to grant cannabis businesses access to banking and other financial services.

Members of the House adopted provisions of the banking bill as an amendment to legislation drafted to support U.S. manufacturing and improve competitiveness with China known as the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act of 2022 (America COMPETES Act of 2022).

NORML cited survey data compiled earlier this year by Whitney Economics. That survey reported that over 70 percent of cannabis businesses say that the lack of access to banking services or investment capital is their top challenge. While 42 percent of respondents cited state regulations as the most significant burden facing the industry, only 39 percent cited the influence of the black market.

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Episode 398 – More of the Same for Legalization

First-time guest Francesca DeMauro joins host Ben Larson to talk about the progress, or lack-thereof, of legalization at the federal level; the latest news out of the states; and a look ahead for what kinds of market movements and contractions we could see in the North American cannabis market in the next two years. Produced by Shea Gunther.

Episode 394 – Sixth Time’s The Charm For SAFE Banking?

Matthew Walter and Alex Halperin joins host Brian Adams to talk about the latest passage of the SAFE Banking Act- the sixth time that’s happened so far- as well as the latest developments for legalization out of Washington, DC; plans by the NFL to study the impact of cannabis on pain; and a California bill that would make homegrow illegal. Produced by Shea Gunther.

Visa Cracks Down On Cannabis Dispensary ‘Cashless ATM’ Transactions

Credit card powerhouse Visa is cracking down on “cashless ATM” transactions processed by cannabis dispensaries and other retailers, saying the popular workaround for credit and debit card payments is prohibited and subject to unspecified penalties.

In a compliance memo sent this month to banks that process payment card transactions for merchants, Visa, the world’s second-largest payment card processing company, noted that it is “aware of a scheme” in which point-of-sale (POS) terminals known as cashless ATMs are used to process purchases. Instead of processing the sale as a purchase, however, the merchant codes the transaction as an ATM withdrawal.

“Cashless ATMs are POS devices driven by payment applications that mimic standalone ATMs. However, no cash disbursements are made to cardholders,” the December 2 memo obtained by Marijuana Moment explains. “Instead, the devices are used for purchase transactions, which are miscoded as ATM cash disbursements. Purchase amounts are often rounded up to create the appearance of a cash disbursement.”

Federal Banking Laws Pose Challenges for Cannabis Businesses

Due to federal banking and money laundering laws that leave traditional financial services largely unavailable to legal cannabis businesses, many marijuana dispensaries utilize the cashless ATM solution to accept credit and debit cards as payment for customers’ purchases. Instead of requiring customers to pay by cash, retailers who utilize the cashless ATM process can offer the convenience of accepting payment cards at the cash register. The option is also more secure for dispensaries than handling large amounts of cash, which puts them at greater risk of armed robbery and other crime.

Although Visa did not specifically mention cannabis dispensaries, the memo noted that cashless ATMs “are primarily marketed to merchant types that are unable to obtain payment services—whether due to the Visa Rules, the rules of other networks, or legal or regulatory prohibitions.”

Visa warned that miscoding POS purchases as ATM withdrawals violates requirements that all transactions processed through the company’s networks contain accurate data. Visa also noted that processing transactions with inaccurate information such as a misidentified merchant or incorrect business location is also prohibited. Although Visa was not specific about the repercussions of processing illegitimate cashless ATM withdrawals, the company noted that such transactions “will be subject to non-compliance assessments and/or penalties” or “subject to further compliance enforcement.”

Morgan Fox, media relations director for the National Cannabis Industry Association, says that it “is unfortunate that Visa is unwilling to work with the cannabis industry, which is legal in dozens of states and represents billions of dollars in economic activity, at a time when this country needs all the financial options it can use.”

But it is even worse that they are trying to discourage alternative solutions that are primarily utilized by small businesses to protect themselves and their customers from theft and violent crime,” Fox told Marijuana Moment.

“The announcement amounts to intimidation,” Fox added, “and will directly put cannabis businesses at even greater risk that could cost lives.”

Christian Sederberg, founding partner with the cannabis law firm Vicente Sederberg LLP, said that licensed cannabis companies “continue to lack consistent and affordable access to the basic financial services that other businesses enjoy.”  

“They are doing everything they can to ensure transactions are taking place safely and legally, but they keep running into these problems due to the illegal status of cannabis under federal law,” Sederberg wrote in an email to Cannabis Now. “Unfortunately, it is smaller businesses and social equity applicants who are at the greatest disadvantage.”

Cannabis Industry Seeks Congressional Help

To address the challenges accessing financial services faced by cannabis businesses, the industry has long sought a legislative solution from federal lawmakers. Under the Secure and Fair Enforcement (SAFE) Banking Act, federal banking regulators would be prohibited from penalizing banks that choose to serve cannabis firms doing business in compliance with state law. The legislation was initially introduced in the House of Representatives in 2013 by Democratic Rep. Ed Perlmutter of Colorado, who has reintroduced the bill each subsequent congressional cycle.

The SAFE Banking Act was passed by the House of Representatives in 2019 and again last year as part of COVID-19 pandemic relief legislation. The House passed the bill again in April of this year as a standalone bill and included the measure in this year’s defense authorization bill, but the version of the legislation passed by the Senate this week does not include the cannabis banking provisions.

Tom DiGiovanni, the chief financial officer for California vertically integrated cannabis company Harborside Inc., noted that a lack of access to traditional financial services has led the cannabis industry to create innovative workarounds for banking and payments. But often, the solutions are less secure for both businesses and customers.

“More credible fintech solutions than the ‘cashless ATM’ that have hit the market have been a step in the right direction, but this does not lessen the urgency of the need for the government to intervene and address the dire situation of cannabis banking,” DiGiovanni wrote in an email. “As we’ve seen in our hometown of Oakland, businesses like ours are at constant risk for burglary or shutdown (as Visa is suggesting) until a solution like the SAFE Banking Act is passed.”

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24 Governors Call On Congress to Pass Cannabis Banking Bill

The governors of 24 states and U.S. territories sent a letter to congressional leaders on Thursday calling on lawmakers to pass legislation that would permit financial institutions to provide banking services to the regulated cannabis industry. The letter from the bipartisan group of two dozen governors seeks passage of the Secure and Fair Enforcement (SAFE) Banking Act, which was approved by the House of Representatives in September as part of a comprehensive defense spending authorization bill.

In the letter, which was sent to Senate Majority Leader Chuck Schumer of New York, Speaker of the House Nancy Pelosi and other Democratic and Republican leaders in Congress, the governors of 21 states, Washington, D.C., the U.S. Virgin Islands and Guam, call for provisions of the SAFE Banking Act to be included in the final version of the National Defense Authorization Act for the 2022 fiscal year.

Relief for a Cash-Heavy Industry

If passed by the Senate and signed into law, federal banking regulators would be prohibited from penalizing banks that choose to serve cannabis firms doing business in accordance with state law. Under current regulations, banks are subject to penalties under federal money laundering and other laws for servicing such companies, leaving the cannabis industry to operate in a risky environment heavy in cash. The legislation was initially introduced in the House in 2013 by Democratic Rep. Ed Perlmutter of Colorado, who has reintroduced the bill each subsequent congressional cycle.

The letter sent on Thursday, which was led by Democratic Governor Jared Polis of Colorado, notes that 37 states, four U.S. territories and the District of Columbia have passed recreational or medical cannabis legalization measures. But businesses in the regulated cannabis industry are still largely unable to access traditional banking services including deposits, payroll and checking accounts.

“Medical and recreational cannabis sales in the U.S. were estimated to total $17.5 billion last year, but because of antiquated federal banking regulations, almost all cannabis transactions are cash-based,” the governors wrote in their letter. “Not only are cash-only businesses targets for crime, cannabis businesses are further disadvantaged compared to other legal businesses by being unable to open bank accounts or obtain loans at reasonable rates.” 

The SAFE Banking Act was passed by the House of Representatives in 2019 and again last year as part of a COVID-19 pandemic relief bill. The House passed the bill again in April as standalone legislation and has included the measure in the defense authorization bill currently under consideration, but the bill has so far failed to be passed by both houses of Congress and signed into law by the president.

“It’s time for Congress to allow cannabis-related businesses to have better access to the banking system and operate with normal bank accounts,” Polis said in a press release on Thursday. “Thank you to Congressman Ed Perlmutter who has continually pushed for legislation to address this important issue. After years of cannabis being legal in a multitude of states, it is long overdue for cannabis businesses to finally financially operate alongside other businesses in the open national banking system.”

The governors also noted in the letter that while cannabis has been legalized in some form by a majority of U.S. states, the continued lack of traditional banking services and large amounts of cash throughout the supply chain leave legal marijuana businesses at increased risk of robbery and other crime. Additionally, the lack of access to loans inhibits the growth of the booming industry.

“The SAFE Banking Amendment will remedy these harms and help keep communities in our states and territories safe by allowing legitimate and legal cannabis companies to access banking services,” the letter continues. “Financial institutions will subject the funds and account holders to rigorous anti-money laundering and ‘Know Your Customer’ requirements that will further help states where cannabis has been made legal to keep bad actors out of the system.

“The SAFE Banking Act has more bipartisan support than ever before, and Congress must take steps to ensure that this measure is included in the final version of the NDAA that goes to President Biden’s desk,” the governors concluded.

In addition to Polis, the letter to Congress was signed by the leaders of Alaska, California, Connecticut, Guam, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New Jersey, New York, North Dakota, Oregon, Pennsylvania, Rhode Island, the U.S. Virgin Islands, Utah, Virginia, the state of Washington, Washington, D.C. and Wisconsin.

In April, a bipartisan group of 21 governors from a nearly identical list of states and territories called on Congress to pass the SAFE Banking Act after the measure was approved by the House of Representatives.

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