Menendez, Booker Urge Treasury Dept. Bureau to Leave Marijuana Banking Guidance in Place

Menendez, Booker Urge Treasury Dept. Bureau to Leave Marijuana Banking Guidance in Place

   

WASHINGTON, D.C. – U.S. Senators Bob Menendez, a senior member of the Senate Banking Committee, and Cory Booker today urged the head of the Financial Crimes Enforcement Network (FinCEN) to keep in place its 2014 guidance providing rules of road for banks and financial institutions that service marijuana-related businesses. This is in direct response to Attorney General Jeff Sessions’ recent decision to rescind an Obama-era memo that eased federal enforcement of marijuana laws.

“When FinCEN issued the guidance it sought to ‘enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses,’” the Senators wrote to Acting FinCen Director Jamal El-Hindi. “These are laudable goals and given the increasing number of states who have legalized certain cannabis operations, such guidance is needed now more than ever.”

New Jersey is one of 30 states and the District of Columbia to legalize some form of marijuana growing, sales and use—doing so for medicinal purposes eight years ago. The Senators are concerned a possible guidance reversal would hamper New Jersey’s medical marijuana industry; leaving veterans and those suffering with cancer with less access to non-opioid alternatives. The Senators want to ensure that marijuana-related businesses in the state can openly and legally access the banking system.

In 2013, then-Deputy Attorney General James Cole released a memorandum directing federal prosecutors not to interfere in states where marijuana was legal. In response to this directive, FinCEN issued guidance to clarify how financial institutions could provide services to marijuana-related businesses.

“Unfortunately, the recent decision by Attorney General Sessions’ to rescind the Cole Memo has layered more uncertainty onto an industry already facing challenges,” the letter continued. “Owners of such businesses report that ‘they live constantly with shifting legal terrain, losing their bank accounts and lines of credit and never knowing how vulnerable they may be to losing their business or being federally prosecuted.’ Without access to the banking sector, these businesses will face serious challenges paying their employees, conducting transactions with vendors, and meeting state tax obligations. Moreover, this could stall or even end efforts in New Jersey to help those suffering with cancer, veterans and other patients from getting non-opioid alternatives to serious medical issues.”

FinCEN is the federal agency tasked with safeguarding the financial system from illicit use, including combating money laundering, while collecting, analyzing and disseminating financial intelligence and strategic use of financial authorities to promote national security.

Under questioning by Sen. Menendez during yesterday’s Banking Committee hearing, Under Secretary for Terrorism and Financial Crimes Sigal Mandelker testified that the FinCEN guidance “remains in place,” but Treasury is currently reviewing that guidance in light of the DOJ’s reversal of the Cole Memo.

Additionally, Sen. Menendez, during the hearing, raised a serious concern regarding public safety if the federal government were to rescind the guidance, leaving marijuana-related businesses with no choice but to run entirely cash-businesses and store their proceeds on premises. In the past, marijuana-related businesses fell victim to violent crimes, and were robbed of their cash on-hand.  The FinCEN guidance alleviates this problem by enhancing the availability of financial services for marijuana-related businesses.

 

WATCH SEN. MENENDEZ’S REMARKS

 

“Since this guidance has been critical to alleviating some of the public safety risks, as well, in terms of accumulation of large quantities of cash at dispensaries and businesses and I worry that any steps to walk-back this guidance only serves to undermine public safety,” said Sen. Menendez.

The full text of the letter is below and can be downloaded here.

 

January 18, 2018

 

The Honorable Jamal El-Hindi

Acting Director

Financial Crimes Enforcement Network

1500 Pennsylvania Ave, NW

Washington, DC 20220

 

Dear Acting Director El-Hindi:

During a January 17, 2018 hearing before the Senate Banking Committee, Under Secretary for Terrorism and Financial Crimes, Sigal Mandelker testified that the Financial Crimes Enforcement Network’s (FinCEN) 2014 guidance clarifying Bank Secrecy Act (“BSA”) expectations for financial institutions seeking to provide services to marijuana-related businesses[1] “remains in place.” To that end, we urge you to continue to keep the guidance in place. When FinCEN issued the guidance it sought to “enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses.”[2] These are laudable goals and given the increasing number of states who have legalized certain cannabis operations, such guidance is needed now more than ever.

As you know, the federal government classifies marijuana as a Schedule I drug. Notwithstanding the federal ban, 29 states and the District of Columbia have legalized certain marijuana-related activity. According to Marijuana Business Daily, nationwide legalized marijuana sales are estimated at $6 billion and projected to grow to $9 billion by the end of the year. The number of shops is estimated at over 4,500.  New Jersey currently has a regulated medical cannabis industry and we must ensure that the banking system is open to these marijuana-related businesses. Federal law prohibits banks from serving marijuana-related businesses leaving such businesses to handle unsafe amounts of cash. Fortunately, FinCEN’s guidance provided assurance that community financial institutions could serve marijuana-related businesses so long as the institution reported suspected wrongdoing. As such, since 2014, the number of banks and credit unions serving marijuana-related businesses has more than tripled.[3]

Unfortunately, the recent decision by Attorney General Sessions, to rescind the Cole Memo has layered more uncertainty onto an industry already facing challenges. Owners of such businesses report that “they live constantly with shifting legal terrain, losing their bank accounts and lines of credit and never knowing how vulnerable they may be to losing their business or being federally prosecuted.”[4] Without access to the banking sector, these businesses will face serious challenges paying their employees, conducting transactions with vendors, and meeting state tax obligations. Moreover, this could stall or even end efforts in New Jersey to help those suffering with cancer, veterans and other patients from getting non-opioid alternatives to serious medical issues. In short, we expect that FinCEN will maintain current guidance allowing financial institutions to provide banking services to legalized cannabis operations.  We thank you in advance for your prompt attention to this matter.

Sincerely, 

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[1] https://www.fincen.gov/resources/statutes-regulations/guidance/bsa-expectations-regarding-marijuana-related-businesses

[2] Id.

[3] http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2017/12/06/why-its-getting-easier-for-marijuana-companies-to-open-bank-accounts

[4] https://www.nytimes.com/2018/01/04/us/politics/marijuana-legalization-justice-department-prosecutions.html