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.
“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:
October 27, 2020