Lawmakers on both sides of the aisle said Wednesday that federal law prohibiting cash-only cannabis businesses from using banks must be changed.
Despite recreational marijuana being legal in 18 states and the District of Columbia, it is still classified as a Schedule I narcotic under federal law. Banks that provide services to cannabis companies — even in states where they operate legally — can face federal charges, which forces cannabis growers, distributors and retailers to perform all transactions in cash.
“If you really wanted to create an industry that’s dependent on gangs and cartels, make it all cash. It’s almost like the system that is there now is oriented towards promoting things that we don’t want,” said Sen. John Hickenlooper (D-Colo.), speaking at The Hill’s Regulating Cannabis event.
Hickenlooper, who was governor of Colorado in 2012 when voters legalized marijuana statewide, has long advocated for decriminalizing cannabis. He called the cash-only system “a recipe for disaster” and a “blueprint for catastrophe.”
“If you de-schedule it, banks can start banking it so it’s no longer a cash business. There are multiple negative consequences of having it be a cash business. One is that businesses themselves can’t get loans.” Hickenlooper told The Hill’s Steve Clemons.
Earlier this year, the Secure and Fair Enforcement (SAFE) Banking Act, which prohibits the federal government from penalizing banks who provide service to legal cannabis businesses, passed the House with bipartisan support.
Rep. Nancy Mace (R-S.C.), who voted for the SAFE Banking Act earlier this year, is one of few Republicans in Congress in favor of decriminalizing marijuana.
“There’s nothing really controversial about cannabis except for here in Washington where you have some members who are afraid of it, or afraid to touch it. It shouldn’t be that way,” Mace said.
Hickenlooper and fellow Colorado senator Michael Bennet (D) sent a letter to Senate leadership last week urging them to include the SAFE Banking act in the National Defense Authorization Act (NDAA).
Hickenlooper noted that the SAFE Banking Act would not “oppose the will” of states that have not legalized marijuana.
“In terms of banking, I don’t think there’s any benefit to penalizing those states where their citizens have voted to legalize,” he added.
But in the nine years since Hickenlooper’s home state became the first in the nation to legalize recreational cannabis, lawmakers from across the country — and political spectrum — have voiced support for cannabis reform.
Mace introduced legislation to federally decriminalize and tax marijuana last month.
Mace’s bill proposes a three percent federal excise tax on cannabis. She said that high taxes levied by some states on recreational marijuana are counterintuitive and strengthen black markets.
But, she said, the current federal prohibition on marijuana places legal cannabis business owners at risk and creates opportunities for bad actors.
“We’re funding the cartels by having all cash businesses,” Mace said, reiterating the notion expressed by Hickenlooper. “It’s dangerous.”