VIDEO: As NJ Moves Toward Legalizing Recreational Marijuana, Menendez Questions Fed Chair on Access to Banking, Financial Services

VIDEO: As NJ Moves Toward Legalizing Recreational Marijuana, Menendez Questions Fed Chair on Access to Banking, Financial Services

Forcing new and existing legal marijuana businesses to operate only in cash raises real public safety concerns Fed Chair calls for clarity through Congressional action to ensure federal regs/laws keep pace with burgeoning legal industry

   

WASHINGTON, D.C. – U.S. Senator Bob Menendez, a senior member of the Senate Banking Committee, today questioned Federal Reserve Chairman Jerome Powell regarding concerns that, as states like New Jersey move towards legalization of recreational marijuana, the burgeoning industry is barred from accessing essential banking and financial services for fear of federal prosecution. 


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“My home state of New Jersey is moving towards legalization of recreational marijuana, and I have concerns that these new businesses as well as the existing medical marijuana businesses in the state will continue to find themselves shut out of the banking system,” Sen. Menendez said.  “And when these businesses are forced to operate exclusively in cash, they create serious public safety concerns.”

Powell agreed with Menendez that Congress should consider providing both financial institutions and insurance providers new clarity so that businesses can operate not only legally, but safely, and that local economies can benefit.

Sen. Menendez has co-sponsored the Secure and Fair Enforcement (SAFE) Banking Act, a bill that would solve a key logistical and public safety problem in states that have legalized medicinal or recreational marijuana by permitting the industry to access the banking system. 

Currently, cannabis businesses operating under state laws that have legalized medicinal or recreational cannabis are largely denied access to the banking system because banks and credit unions that provide them services can be prosecuted under federal law.  Without the ability to access bank accounts, accept credit cards, or write checks, businesses must operate using large amounts of cash.  This creates safety risks for businesses and surrounding communities, and makes it more difficult for local and state governments to collect taxes. 

The SAFE Banking Act would prevent federal banking regulators from:

  • Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business (such as an lawyer or landlord providing services to a legal cannabis business);
  • Terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned cannabis business or associated business;
  • Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
  • Taking any action on a loan to an owner or operator of a cannabis-related business.
  • The bill also creates a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to legitimate, state-sanctioned cannabis businesses, while maintaining banks’ right to choose not to offer those services.