CPA, Partner
View full biography
First Subcommittee Hearing on Banking Services for Cannabis-Related Industries
Last week, Congress held its first-ever hearing on the issue of cannabis banking, entitled “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses.” The hearing, which took place before the Subcommittee on Consumer Protection and Financial Institutions, addressed a draft of the Secure and Fair Enforcement Banking Act, or SAFE Banking Act, introduced by Congressman Ed Perlmutter (D-Colo.).
The SAFE Banking Act would:
- Provide a safe harbor for financial institutions to legally provide services to cannabis-related industries in states where cannabis has been legalized in some form
- Allow legal businesses to access financial services in states where cannabis has been legalized
- Address a void in banking that faces cannabis-related businesses and increase the number of banks providing financial services to these businesses
- Help prevent tax evasion, fraud, and public safety issues
CohnReznick observed this historic first hearing on banking in the cannabis industry, held five and a half years after the issuance of the Cole Memorandum in August of 2013, which provided U.S. Attorneys guidance on enforcement action against cannabis businesses in states that had legalized marijuana. In 2018, Attorney General Jeff Sessions rescinded the Cole Memo, which created confusion and uncertainty for many cannabis business owners.
This act could have a tremendous impact on the cannabis industry. Given the explosive rise of medical and recreational-use cannabis businesses, it is critical that banks and financial institutions be able to provide services and have a presence sufficient to serve such a rapidly growing industry. While there was much debate during the hearing and proposed improvements to the bill, it appears that the bill has the votes necessary to advance out of the committee.
CohnReznick does not take a position on federal cannabis legalization but supports any efforts to enable access to banking through the SAFE Banking Act. Access to the regulated banking industry will increase financial transparency and auditability. This should be of significant benefit to investors, regulators, and taxing authorities.
Related Services
This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
Related Insights
-
InsightFinancing Options for Cannabis CompaniesAndrew LinesFor cannabis companies seeking financing, it can be difficult to understand what factors lenders consider when evaluating a business’s eligibility.
-
Press ReleaseFlowertown and CohnReznick Team Together to Provide Extensive Business and Marketing Services and Consumer Education to the Maturing Cannabis IndustryFlowertown, a rapidly growing cannabis media and marketing brand, and CohnReznick LLP, one of the largest accounting and consulting firms in the country, announced today that they will be teaming to deliver a comprehensive suite of services to the cannabis industry.
-
InsightHow Banking Challenges Impede the Growth of the Cannabis Industry TodayMaier N. RosenbergWith recreational cannabis now legal in Canada and many U.S. states, 2019 seems poised to become a turning point for the industry. However, within U.S. borders, one thing still limits growth: Cannabis companies’ lack of access to banking and financial services.
-
InsightThe SAFE Banking Act Would Be a Giant Leap for Legal CannabisMaier N. RosenbergThe Secure and Fair Enforcement (SAFE) Banking Act, which, in March, passed the U.S. House Committee on Financial Services by a significant bipartisan margin, represents a promising step forward for banks and cannabis companies that want to take sales out of the cash-based market and into the mainstream.