The first marijuana hearing of the 116th Congress began on Wednesday. A financial subcommittee of the House interviewed witnesses how access to the banking sector can improve public safety, how a bar-only operation inhibits transparency, and whether the cash in those companies smells of cannabis.
"The lack of a broad, sustainable regulatory framework, despite clear interest, keeps almost all banks out of this growing industry," said Subcommittee Chair Gregory Meeks (D-NY) at the beginning of the session. "Today's hearing will allow us to examine the draft law in order to create transparency and accountability and address a major driver of violent crime in the area."
Chairmanship of the Consumer Protection and Financial Services Subcommittee on Challenges and Solutions: Access to banking services for cannabis-related companies pic.twitter.com/TC0soeE2RM
– Rep. Gregory Meeks (@RepGregoryMeeks) February 13, 2019
Prior to the hearing, a bipartite group of parties put forward a bill that would protect banks from being punished by federal financial regulators and assure that profits from cannabis-related transactions are "not considered to be proceeds from an illegal activity" ,
"Today, after six years, we finally have a hearing, and it's too late," said MP Denny Heck (D-WA), co-founder of the legislation, in his opening speech. "Too late to prevent dozens of armed robberies in my home state of Washington. Too late for Travis Mason … a 24-year-old Marine veteran in Aurora, Colorado, who reported on June 18, 2016, as a security guard and Green Heart Dispensary, and was shot dead by an armed robber that night. "
"We have the power to prevent murders and armed robberies in this committee," he said, pointing to the fact that preventing banks from getting access to marijuana banks means they must operate cashlessly. "We have to use it and we have to use it now because we are already too late."
For six years, we need banking for cannabis companies. It is unacceptable that Congress can not address such a critical public security threat. We are late and it is time to do it #SAFEBanking Plot. pic.twitter.com/Lzcm85YgyV
– Denny Heck (@RepDennyHeck) February 13, 2019
Rep. Ed Perlmutter (D-CO), another legislator, said that if legislators reject legalization, "that's their business".
"But the American voters have spoken and kept talking, and the fact is, you can not put the genius back in the bottle," he said. "The ban is over."
Today's hearing is a big deal for the thousands of employees, businesses and communities at risk because they were forced to trade in cash. We need #SAFEBanking to get money off the road and make our communities safer. https://t.co/fEmJbQc2X8
– Rep. Ed Perlmutter (@RepPerlmutter) February 13, 2019
I appreciate the subcommittee, which allows me to testify during the hearing. This comes 6 years later @RepDennyHeck & I first introduced ours #SAFEBanking Legislation. I appreciate it too @RepSteveStivers & @WarrenDavidson Assisting both parties in solving the cannabis bank problem. https://t.co/6ChK0qVc87
– Rep. Ed Perlmutter (@RepPerlmutter) February 13, 2019
Witnesses to the hearing were Fiona Ma, the Treasurer of the State of California, Major Neill Franklin, Executive Vice President of Law Enforcement Action Partnership (LEAP), bank representatives, a medical marijuana pharmacist in DC, and chairman of the Anti-Legalization group Smart Approaches to Marijuana (SAM)).
"The committee is unquestionably aware that cannabis companies are not alone in finding access to banking, even if this is the most difficult situation. Any company that handles significant currency amounts is subject to closer scrutiny by the financial services industry for all reasons well understood by members of that committee, "Ma said in a written statement.
"Without a bank account, legally #Marijuana Companies must be cash-based to make them robberies. In California, cannabis pharmacies have packaged bags and suitcases filled with money to pay their taxes … " @fionama @FSCDems
– CA State Treasurer (@CalTreasurer) February 13, 2019
She said: "An effective federal safe harbor mechanism promotes public safety, improves the efficiency of collecting the taxes and fees we use to regulate the industry, and does not allow banks and credit unions to completely neglect their responsibilities their customers and avoid illegal money laundering. "
Rep. Ted Lieu (D-CA) said he was glad to announce Ma. Legal Marijuana "is here to stay, and business owners and consumers deserve secure banking options," he wrote on Twitter.
Glad to see @CalTreasurer @fionama as one of the witnesses in today @FSCDems Consultation on access to banking services for companies related to cannabis. Legal #Cannabis is here to stay, and business owners and consumers deserve secure banking options. Take a look LIVE here: https://t.co/KfPk9zVpaE
– Rep. Ted Lieu (@RepTedLieu) February 13, 2019
Rep. Dina Titus (D-NV) repeated this point, saying that Nevada was "proof that the era of marijuana prohibition is over" and that "it is time for the federal government to behave like them".
The first hearing of the congress on marijuana banking is currently taking place. Nevada is proof that the era of marijuana prohibition is over. It is time for the federal government to behave this way.
– Dina Titus (@repdinatitus) February 13, 2019
Franklin, a retired Maryland police officer, said that existing laws "promote tax fraud, incur costly monitoring and accounting costs and, above all, make legitimate businesses vulnerable to theft, robbery and violence associated with these crimes."
"I'm not out of fear of having a baby – what I can testify here today is based on experience and research," he said. "Any police officer who has worked on the street or has investigated enough robberies will testify to the same when it comes to dealing with large amounts of cash."
He told subcommittee members that "the safety of thousands of employees, business owners, security personnel, police and community members is in your hands."
MEP Maxine Waters (D-CA), Chair of the Full House Financial Services Committee, thanked Meeks for having been the first hearing of the subcommittee of the meeting, calling the topic "so important".
"So many people have been waiting for this," Waters said before the subcommittee broke out for a break. "I appreciate it so much."
The hearing was well attended, as MP Alexandria Ocasio-Cortez (D-NY) highlighted in a tweet depicting a number of people holding seats for lobbyists, and "those who can afford pay People to hold their place. "
Apparently this is a normal practice and people do not watch.
The first persons in the row have a guaranteed seat.
This was the hearing for marijuana banking laws. Lobbyists and those who can afford pay for keeping people in their first place.
– Alexandria Ocasio-Cortez (@AOC) February 13, 2019
During the hearing, Ocasio-Cortez asked if providing marijuana banking access would "exacerbate the racial divide" and give mostly white, wealthy business owners an advantage over individuals from communities not benefiting from the drug war proportionally affected.
Corey Barnette, owner of the US marijuana business, said he agrees that today's industry does not reflect society as a whole, but also that access to banking offers even smaller potential business owners the opportunity to be "within reach" a cannabis company.
During one of the lighter moments in the hearing, Rep. Rashida Tlaib (D-MI) asked Barnette if the money in his pharmacy smelled of marijuana.
"I've heard it's true," Tlaib said. "The money smells, right?"
"That was the case in some cases," Barnette replied.
While SAM Chairperson Jonathon Talcott's chairperson was rarely addressed by members during the hearing, Representative Roger Williams (R-TX) asked if it was "a widely recognized fact that marijuana is not a gateway drug, and none negative impact on the public health. "
Talcott claimed that cannabis was "clearly a gateway drug" and announced anecdotes about "marijuana-induced psychosis" in legalized states.
In the hearing of the Subcommittee on Consumer Protection and Financial Institutions we discuss the challenges and solutions for cannabis companies and their access to banking services. pic.twitter.com/MCjOwlyNOf
– Rep. Jennifer Wexton (@RepWexton) February 13, 2019
Heck, one of the bank's sponsors, responded to the question, which motivated him to push for legislation on financial services solutions for the marijuana industry. He said it was his brother who died after being exposed to herbicides during the Vietnam War.
"Toward the end of his life, the only relief he could find was the illegal use of marijuana," Heck said. "I've always thought and lived with the irony that the same nation that asked my brother to put on a uniform and endanger his life – in an activity that ultimately cost his life – considered him criminal when he did the relief in the only way he could. "
And if setting up a banking protection system makes it easier for marijuana companies to relieve patients, that's reason enough to fight for reform, Heck said.
"Congress has the opportunity to make a simple policy change that will benefit communities and small businesses by approving cannabis bank reform," said Aaron Smith, executive director of the National Cannabis Industry Association, in a press release. "Representatives Perlmutter and Heck should be praised for pushing for this hearing to get the attention it deserves, and we can pursue a sensible policy that will increase public safety and transparency in this emerging industry."
Representative Earl Blumenauer (D-OR), who has published a blueprint for the legislative path to legalizing marijuana, said in a press release that combating "access to banking" is "one of the first dominoes to fall".
The hearing shows that Congress "is finally making progress in dealing with the irrational, unfair and unsafe refusal of regular banking services for state-run marijuana businesses across the country," he said.
"Today's hearing has been a big problem for thousands of employees, businesses and communities in this country, who were in danger because they were forced to trade cash while Congress was puzzled," said Perlmutter Bill Cosponsor said in a press release. "The American voters have spoken and kept talking, and the fact is that you can not put the ghost in the bottle. The SAFE Banking Act focuses exclusively on taking money off the streets and making our communities safer, and only Congress can take these steps to provide that security to businesses and financial institutions across the country. "
I appreciate today's first hearing #Cannabis Banking & I encourage all my colleagues to consider that #SAFEBanking Act as a means to get money off the streets and make our communities safer. Only Congress can provide security for these companies and financial institutions. pic.twitter.com/o1fHWXNOcr
– Rep. Ed Perlmutter (@RepPerlmutter) February 14, 2019
Forty-seven states and the District of Columbia have spoken and legalized some form of recreational and medical marijuana, including CBD. 318.2 million people live in these 47 states – that is 97.7% of the population. It is time to pass federal and federal law in this matter with the #SAFEBanking,
– Rep. Ed Perlmutter (@RepPerlmutter) February 13, 2019
"We spent hours today hearing testimonies about the dangerous position we bring to shopkeepers and employees by forcing them to do their entire business in cash. We can fix that. We do not have to force them to act in ways that make it difficult to secure and track their funds, "added Heck. "Regardless of our views on the use of marijuana, voters in the federal states have decided that they want recreational and drug markets. It would be negligent not to further protect public safety. "
This is the plan of the Marijuana Banking Democrats to be adopted in 2019: draft text published
Photo courtesy of the House Financial Services Committee / YouTube.