A bipartisan amendment is under consideration by Congress that would allow federally-regulated banking institutions to do business with marijuana companies without fear of federal repercussions.
The amendment, brought forth by Florida Republican Matt Gaetz and Florida Democrat Darren Soto, would prohibit federal banking agencies from discouraging or penalizing banks for taking deposits from cannabis-related businesses that abide by state laws and regulations.
Most banking institutions have steered clear of doing business with marijuana companies as the regulatory risk is high since marijuana is still illegal at the federal level. Marijuana is still labeled a Schedule I substance along with heroin and LSD.
Federal law requires banks to report any marijuana-related transactions as suspicious activity, which could open them up to seizure by the Federal Deposit Insurance Corporation. The U.S. Treasury Department’s Financial Crimes Enforcement Network has, however, issued guidelines for how banking institutions could do business with marijuana companies.
While some small independent banks have taken the risk, the larger banks have remained hands off. That has forced a lot of cannabis growers and dispensaries to do business in cash, which make them targets for crime.
Marijuana sales grew 30% last year and in Colorado, one of the industry’s earliest test markets, marijuana generated $200 million in tax revenue from $1.3 billion in sales.
Representatives for Gaetz’s and Soto’s offices were not immediately available for comment. The U.S. House of Representatives could vote on the Choice Act as early as Thursday.
The introduction of such an amendment shows the federal government is willing to take a look at updating laws binding the marijuana industry, and it could potentially start to pave a way forward.
About 21% of the U.S. populations currently lives in a state where marijuana is legal. Florida, Gaetz and Soto’s home state, has legalized medical marijuana. And the industry is sure that more states will follow. Vermont is attempting to legalize marijuana by the legislature, unlike Colorado and Washington that did it through voter referendums.
credit:marketwatch.com
