Despite being legal in a handful of states many cannabis companies struggle to find banks and financial institutions willing to take a gamble on an industry reliant on a product that remains on the federal government's blacklist.
While 33 states have legalized marijuana in some form, it is still illegal at the federal level – making banks and financial institutions, like credit unions, wary of doing business with cannabis companies.
Currently, there are 438 banks and 113 credit unions that actively work with marijuana-related businesses in the United States, according to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).
A bill was introduced in Nevada on March 25 that hopes to create a process to license banks and credit unions serving marijuana dispensaries in order to offer dispensaries a safe way to invest in the economy. Under the proposed bill, the licensed banks and credit unions would not be required to be insured by the FDIC.
Legislation introduced in Washington D.C. earlier this month by Democrats Ed Perlmutter of Colorado and Denny Heck of Washington aims to offer banks, including ancillary businesses, protections against sanctions when associating with marijuana companies. The bill would also adjust tribal language and change the definition of cannabis business.
Under the current law, financial institutions could face criminal prosecution for working with marijuana companies as it is still viewed as a Schedule I drug at the federal level.
The SAFE Banking Act would offer protections for banks and financial institutions against sanctions for working with Marijuana companies.
Without access to banks, marijuana companies are forced to operate mainly in cash -- making the businesses prime targets for crime.
The SAFE Banking Act, which has more than 130 bipartisan co-sponsors, has been pushed since 2013 – but with a Democrat-controlled House of Representatives, Perlmutter believes the odds of passing legislation is much higher than in the past.
“We’ve got a lot better chances than we’ve ever had before, in part, because Democrats took the House and I think the fact that we are at 47 states that have some level of marijuana use,” Perlmutter said. “Prohibition is over. We need to get the cash off the streets.”
The first markup hearing for the bill in the House Financial Services Committee was scheduled for March 26.