Oregon congressmen introduce bill allowing cannabis businesses to bank (print copy)

Published 5:00 pm Wednesday, May 10, 2023

Two Oregon Democrats

in Congress are pushing

for legislation that would

remove the threat of penalties for banks that work

with cannabis-related businesses.

Sen. Jeff Merkley and Rep. Earl Blumenauer — along with Republican colleagues Sen. Steve Daines, R-Mont., and Rep. Dave Joyce, R-Ohio — recently introduced the SAFE (Secure and Fair Enforcement) Banking Act of 2023.

Americans who live in states and territories where cannabis has been legalized in some form outnumber those who don’t.

But because the drug remains illegal at the federal level, cannabis operations can’t do business with conventional banks, credit unions and other financial institutions that don’t want to be seen as breaking U.S. law.

“Our federal laws haven’t kept up, and they have forced the cannabis industry to be an all-cash industry,” Merkley said in a press call with Blumenauer and Oregon media outlets Wednesday. “Or, occasionally, some financial institutions have served the industry but with very, very high fees to go with that.”

Pharm to Table, a marijuana retailer with outlets in Medford and Phoenix, has to use credit unions that charge it fees of around $500 a month simply because the retailer deals in cannabis, according to co-owner David Bryant.

Moving the money to those locations requires couriers, another paid service.

“It’s very cost-prohibitive, especially in a market that is downward-trending right now because of overproduction and just so many dispensaries now competing,” Bryant said. “So having all those financial burdens on us is pretty difficult.”

Cash-only transactions resulting from the federal prohibition are a risky practice that makes the stores and their employees vulnerable to theft and harm.

Merkley said, “The cash economy is a terrible thing for accountability, but it’s great for crime — crime including robberies, and we’ve had a lot of robberies of retail cannabis outlets in Oregon. It’s great for assaults; we’ve had many assaults on individuals who work at cannabis retail outlets, because people think, ‘Well, they may be carrying a lot of cash with them.’ It’s good for tax fraud. It’s good for money laundering. It’s good for organized crime.

“None of those things are things that we want to be facilitating,” he continued, “which is why passing the SAFE Banking bill has been such a priority of mine.”

Bryant said that being able to bank normally, including taking card payments, “would be huge — a lot safer, as well.”

A November 2022 Pew Research Center poll found that 59% of Americans support legalizing cannabis for medical and recreational use.

The drug is legal for medical use in 38 states and Washington, D.C., and for recreational use in 22 states and D.C. Oregon legalized recreational marijuana use in 2014.

The bill, which has several dozen sponsors, including a handful of Republicans, is scheduled to come before the U.S. Senate Committee on Banking, Housing and Urban Affairs Thursday.

Similar legislation has passed the U.S. House of Representatives seven times only to hit a wall in the Senate, Blumenauer said.

“When Mitch McConnell was the Senate majority leader, it just kind of went into sort of a hospice program on the other side of the Capitol,” he said.

The bill would not accomplish everything the Oregon Democrats want.

It doesn’t address the fact that cannabis companies cannot deduct their business expenses for tax purposes — that is, the companies pay taxes on their full revenue rather than their net revenue.

“It’s hopelessly unfair that they cannot deduct their normal business expenses,” Blumenauer said, “and it actually encourages people to sort of cut their corners in terms of tax reporting.”

Once the bill reaches the Senate floor, provisions may be added.

One proposed provision would offer federal grants for states to expunge the criminal records of nonviolent cannabis-related crimes. Another would allow people who smoke pot in states where the drug is legal to purchase guns. The congressmen said the bill is likely to get at least 60 votes in the U.S. Senate.

The House, where Republicans hold a slim majority, is less certain, Blumenauer indicated. “We’ll have to pick our path going forward carefully,” he said.

They said they are confident the SAFE Banking Act will become law.

Blumenauer said he believes that full federal legalization of marijuana could happen in the current Congress.

Merkley said doesn’t think so, but believes it will happen eventually.