This blog has previously addressed the difficulties the cannabis industry encounters with the current federal banking system. One potential solution proposed by Governor Murphy was the establishment of a state bank for cannabis businesses only, which has yet to materialize.
A recent development on this issue took place nationally when Chairman of the Federal Reserve Jerome Powell requested clarity on this subject from the Senate Banking Committee. Chairman Powell was responding to a question from Senator Robert Menendez (D-N.J.), who raised that New Jersey is moving toward legalization of recreational cannabis. The concern for Senator Menendez – as is the concern for many in the industry – is that cannabis businesses will be shut out of the banking industry and will be forced to operate only in cash, which is a safety risk.
A House Financial Services subcommittee held the first-ever hearing on cannabis and banking earlier this month, and witnesses provided testimony about the difficulties and dangers of operating an all-cash business. The subcommittee discussed the SAFE Banking Act, a bill that would allow legitimate cannabis businesses to use financial institutions. The bill has bipartisan support and is expected to be introduced in the near future.
It is becoming abundantly clear that politicians at the federal level are starting to be acutely aware of the existing tensions between legal state cannabis businesses and federal banking laws. This blog will continue to monitor all developments in this critical area of cannabis law.
Alex concentrates his practice on business litigation and counseling. Alex is the author of the New Jersey Cannabis Counsel blog where he tracks and analyzes developments in New Jersey’s efforts to legalize recreational cannabis and the potential impact on cannabis businesses in New Jersey. Alex is also a member of the New Jersey Cannabusiness Association.