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Senate Holds Public Hearing on Banking Access for the Cannabis Industry

On July 23, 2019, the United States Senate Committee on Banking, Housing, and Urban Affairs (the “Committee”) held a public hearing on the cannabis industry and its inability to access the nation’s financial services market.  As cannabis is a federally prohibited controlled substance, any and all proceeds derived from its sale cannot be deposited in federally insured financial institutions.  Since the cannabis industry cannot deposit any proceeds, cannabis companies are strictly cash-only.  The dangerous combination of cannabis and hard currency in one place creates an unfortunate and pervasive risk for theft and robbery.

The hearing, “Challenges for Cannabis and Banking: Outside Perspectives,” included prepared testimony from Senators Gardner (R-CO) and Merkley (D-OR), both of whom are co-sponsors to the Secure and Fair Enforcement Banking Act (the “SAFE Act”).  Generally, the SAFE Act relieves financial institutions from the threat of federal prosecution for granting financial services to state-sanctioned cannabis businesses.

In his opening remarks, Senator Gardner acknowledged that the federal government is “waking up to the reality that the cannabis issue is not going to go away,” and that the nation’s cannabis laws “have become both intolerable and untenable.”  The SAFE Act explicitly states that proceeds from a cannabis-related legitimate business will not be considered as proceeds from an unlawful activity solely because the transaction was conducted by a cannabis-related legitimate business.  Accordingly, financial institutions will be free to engage in financial services with legitimate cannabis businesses without fear of retaliation from federal banking regulators.

While the SAFE Act still requires passage through Congress and President Trump’s signature, the SAFE Act’s introduction in the House of Representatives this past March and the Senate’s public hearing on the same are significant steps forward for cannabis-related businesses gaining access to the nation’s financial services market.

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About this Author

Joshua Jarrell, Steptoe-Johnson Law Firm, Charleston, Finance Law Attorney
Of Counsel

Josh Jarrell concentrates his practice in public and project finance, municipal bonds and economic development. He also has a background in energy law and title-curative issues. His work throughout the region has built valuable relationships nationwide and fostered in-depth knowledge of options available to developers in West Virginia, Ohio, and Pennsylvania. Clients appreciate his focus and accessibility as much as they do his legal experience. He is the former Deputy Secretary and General Counsel at the West Virginia Department of Commerce, where he counseled the...

304-353-8136
Ryan Dunne Ewing Medical Cannabis Attorney Steptoe Johnson Law Firm
Associate

Ryan Dunne Ewing represents corporate medical cannabis growers, processors, and dispensaries within West Virginia. Ryan ensures prospective medical cannabis organizations comply with the West Virginia Medical Cannabis Act and facilitates proper capital handling procedures under the Patriot and Bank Secrecy Acts.

Ryan’s practice also focuses on state and federal infrastructure development.  He regularly counsels both public and private utilities before the Public Service Commission of West Virginia, and he has experience with the funding and financing of infrastructure expansion projects.  Ryan has also represented clients before the Federal Energy Regulatory Commission concerning interstate and intrastate natural gas transmission pipelines.

Ryan has a wide range of experience on the regulation and expansion of infrastructure on both a state and federal level, including: applications for a certificate of public convenience and necessity, base rate cases, pressure commitment obligations, firm capacity requirements, underground natural gas storage facilities, expedited recovery of infrastructure costs through rate base, pipeline replacement expansion programs, municipal appeal rate cases, earnings tests, depreciation rate cases, affiliated transaction cases, purchased gas adjustment proceedings, purchases and sales of public utilities, consolidation proceedings, and defense of customer complaints.

304-353-8186