Sixteen members of Congress sent a letter to federal banking regulators Tuesday urging them to quickly implement the federal government's new guidelines that would allow marijuana businesses access to traditional financial services. But members of the banking community say that the rules, even if enacted, still wouldn't address their fears of working with the pot industry, and that they remain unlikely to offer banking to such businesses.
"In order for these goals to be achieved, it is critically important regulators implement this guidance and ensure on-site examiners fully comply with the new standards," the members of Congress wrote. "Banks need to have confidence they can provide banking services to legitimate marijuana businesses without threat their regulators will penalize them, threaten their deposit insurance, increase their capital requirements or force them to close accounts or stop providing services."
But banks do not have confidence in this guidance, James Ballentine, executive vice president of congressional relations and political affairs for the American Bankers Association, told The Huffington Post. Ballentine said that Tuesday's letter doesn't remove the fundamental issue that bothers banks: Federal law makes possession and distribution of marijuana illegal.
"Lawmakers understand that FinCEN’s guidance doesn't change federal law, which Chairwoman Yellen, banks and all regulators must follow," Ballentine said. "In order for institutions to be comfortable banking marijuana businesses, Congress has to be involved in creating a legislative fix."
In February, the Treasury Department issued guidelines along with a memo from a top Justice Department official that were intended to ease concerns that the federal government would target banks working with marijuana-related businesses that are state-legal and state-licensed. The plan instructs banks to file a "suspicious activity report" for a wide range of financial transactions by any legal marijuana business, but the banks would also specify if they did not believe illegal activity beyond simply dealing in the marijuana trade was taking place.
However, the DOJ memo fell short of expressly protecting banks that work with state-legal, state-licensed marijuana businesses from prosecution.
Expanded banking access would enable the cannabis industry's growing number of businesses to function like traditional places of work, and implementing a reporting structure would allow the federal government to take a close look at how they operate. But Ballentine's statement echoes similar sentiments from other banking and financial services officials, who say that these guidelines are not enough for banks to do business with the legal marijuana industry.
Amanda Averch, communications director for the Colorado Bankers Association, told HuffPost that the CBA believes the lawmakers who wrote the letter are doing the right thing, particularly in urging Congress to act, but is skeptical that it will change anything.
"We don't expect this attempt to address the issue with federal bank regulators to be successful," Averch said.
When the new banking guidelines were first announced, Don Childears, president and CEO of the Colorado Bankers Association, said "no bank can comply" with the rules, adding that at best, the new rules amount to "'serve these customers at your own risk' and it emphasizes all of the risks."
"After a series of red lights, we expected this guidance to be a yellow one," Childears added. "This isn't close to that. This light is red."
Debit and credit card services will also probably remain unavailable to marijuana businesses under the new guidance, since major credit card-processing banks do not want to expose themselves to the risks that would still exist, Steven Brudner, managing director of Merchant Services Consulting Group, told The Wall Street Journal.
Due to the banks' fears of being implicated as money launderers, marijuana-related businesses are often forced to conduct cash-only transactions, putting the retailers' safety at risk and creating issues involving taxes and employee payroll.
Rep. Ed Perlmutter (D-Colo.), one of the signees of the letter, said in a press statement that although he supports the the implementation of these new regulations, a full resolution of this issue is better addressed by his Marijuana Access to Banking Act legislation, co-sponsored by another signee, Rep. Denny Heck (D-Wash.). That legislation would change federal law and create the protections for depository institutions needed so they can effectively provide financial services to marijuana-related businesses.
Perlmutter's legislation has 28 bipartisan co-sponsors, but has yet to receive a committee hearing.
Twenty states including the District of Columbia have legalized marijuana either for medical or recreational use, and at least a dozen more are expected to follow suit in the coming years.
The letters were signed by Rep. Ed Perlmutter (Colo.), Rep. Denny Heck (Wash.), Rep. Earl Blumenauer (Ore.), Rep. Barbara Lee (Calif.), Rep. Sam Farr (Calif.), Rep. Eric Swalwell (Calif.), Rep. George Miller (Calif.), Rep. Jim Moran (Va.), Rep. Adam Smith (Wash.), Rep. Jared Polis (Colo.), Rep. Suzan DelBene (Wash.), Rep. Steve Cohen (Tenn.), Rep. Beto O’Rourke (Texas), Rep. Derek Kilmer (Wash.), Rep. Jim McDermott (Wash.), and Rep. Jan Schakowsky (Ill.).
The members of Congress sent Tuesday's letter to Federal Reserve chair Janet Yellen, currency comptroller Thomas Curry, Federal Deposit Insurance Corporation chairman Martin Gruenberg and National Credit Union Administration chairman Deborah Matz. Read the full text below: