Cannabis Banking

Position

  • ICBA does not advocate for the legalization of cannabis.
  • ICBA advocates for federal legislation establishing an effective “safe harbor” from federal sanctions for banks that choose to do business with cannabis-related businesses (CRBs), including businesses that provide products or services to CRBs, in states where cannabis is legal under state law.
  • This safe harbor must extend to banks that serve businesses that may serve CRBs (“ancillary businesses”) such as landlords, accountants, utility providers, and others. Ancillary businesses may be paid in funds ultimately derived from cannabis sales.
  • Federal banking regulators should not be able to threaten or limit a bank’s deposit insurance, downgrade a loan made to a CRB, force a depository institution to cease providing banking services to a CRB, or take any other prejudicial action in a state where cannabis is legal, solely because the customer is a CRB.
  • ICBA opposes any effort by a state or municipality to establish a publicly owned bank or credit union to service the cannabis industry. Traditional banks are fully capable of serving this industry with the creation of an effective “safe harbor” to protect them from government or regulatory reprisal.

Background

Cannabis is currently legal for adult recreational use in 11 states and the District of Columbia and for medical use in 33 states. As more states legalize cannabis for medical and/or recreational use, it is critically important that cannabis-related businesses (CRBs) have access to services provided by the traditional banking system.

At the federal level, cannabis remains illegal under the Controlled Substances Act. As more states legalize cannabis and this segment of the business community continues to mature, the conflict between state and federal law creates increasingly significant legal and compliance concerns for state and federally chartered banks that wish to service CRBs or continue to serve existing customers that may also do business with CRBs.

Due to legal and regulatory uncertainty, CRBs lack access to the traditional banking system forcing them to operate mostly in cash. Cash-only businesses, especially those with a high volume of revenue, pose a significant risk to public safety.

Given the disparity between federal and state law, community banks should not be placed at a competitive disadvantage with the establishment of a public bank or credit union to service CRBs. Traditional banks, with the protection of a safe harbor, are fully capable of serving the banking needs of CRBs.

Moreover, history clearly indicates that other financial service providers founded for narrow, specialized purposes inevitably expand beyond their original scope. Tax-subsidized credit unions and the Farm Credit System have expanded well beyond their original limitations and now compete directly with community banks. Once established, a state or public bank would advocate relentlessly for additional powers to assure its longevity and survival, to the detriment of private-sector competitors.

Staff Contacts: Aaron Stetter, Steve Keen, and Lilly Thomas

Articles & Press Releases

Title Publication Date
Mnuchin: Cannabis conflict ‘a problem’ NewsWatch Today Article 03/05/20
USDA approves state and tribal hemp production plans NewsWatch Today Article 02/21/20
ICBA to USDA: Accommodate lenders, producers on hemp rule NewsWatch Today Article 01/30/20
ICBA Comment Letter: USDA's Hemp Interim Final Rule Letters to Regulators 01/29/20
ICBA emphasizing cannabis safe harbor benefits to Crapo NewsWatch Today Article 01/28/20
ICBA to Crapo: Cannabis safe harbor a targeted solution NewsWatch Today Article 01/14/20
Crapo Seeks Feedback on Cannabis Safe Harbor NewsWatch Today Article 12/19/19
USDA Establishes Hemp Production Program NewsWatch Today Article 10/29/19
Blog Details What's Next for Cannabis Banking NewsWatch Today Article 10/16/19
ICBA Issues Explainers on Cannabis-Banking Bill NewsWatch Today Article 10/09/19
Tell Congress: Help Community Banks Serve Military, Rural Communities NewsWatch Today Article 09/27/19
House Passes Cannabis-Banking Bill NewsWatch Today Article 09/26/19
ICBA Supports House Passage of SAFE Banking Act Press Release 09/25/19
Tell Congress to Pass Cannabis Bill: Romero Rainey NewsWatch Today Article 09/24/19
ICBA, Groups to House: Pass Cannabis-Banking Bill NewsWatch Today Article 09/20/19
ICBA, Groups to House: Pass Cannabis-Banking Bill NewsWatch Today Article 09/19/19
Tell Congress to Advance Cannabis-Banking Bill NewsWatch Today Article 09/19/19
ICBA, 43 State Associations Urge House Vote on Cannabis-Banking Bill NewsWatch Today Article 09/17/19
ICBA Urges Full House Vote on SAFE Banking Act Press Release 09/16/19
ICBA Urges Senate Panel to Take Up Cannabis Safe Harbor NewsWatch Today Article 07/24/19

Letters to Congress

Title Recipient Date
Committee on Banking, Housing, and Urban Affairs
01/13/2020
House of Representatives
09/24/2019
House of Representatives
09/19/2019
U.S. House of Representatives
09/16/2019
Sens. Jeff Merkley and Cory Gardner
04/12/2019
House Financial Services Committee
03/26/2019
Reps. Perlmutter, Heck, Davidson, Stivers
03/08/2019

Letters to Regulators

Title Recipient Date
U.S. Domestic Hemp Production Program
01/29/2020

Testimonies

Title Committee Presenter Date
Senate Banking Committee
Written Statement
07/23/19
Senate Banking Committee
Written Statement
05/07/19
House Financial Services Committee Subcommittee on Consumer Protection and Financial Institutions
Greg Deckard
02/13/19

Summaries

Title Content Type Date
ICBA Summaries
10/09/2019
ICBA Summaries
10/09/2019