SACRAMENTO, Jan. 16, 2018 – Attorney General Xavier Becerra today joined a bipartisan group of 18 state attorneys general in urging Congress to advance legislation that will enable the cannabis industry to participate in the banking system in states that have legalized medicinal or adult use of cannabis. The recent decision by the Trump Department of Justice to rescind prior federal guidance rolled back critical protections for the legal cannabis industry.
“California voters have made it clear: when it comes to the cannabis industry, California is moving forward, not backwards,” said Attorney General Becerra. “This is an issue that is impacting both red and blue states. The future of small and local licensed businesses has been clouded by the Trump Administration’s relentless attacks on progress, in conflict with the will of voters. Congress has the power to protect a growing $6.7 billion industry and the public safety of our communities. My team at the Department of Justice is committed to implementing and enforcing the law in California in a way that most effectively protects the health and safety of our people.”
YubaNet is powered by your subscription
California, along with 28 other states and several U.S. territories, has legalized the medical use of cannabis. However, under the Controlled Substance Act and certain federal banking statutes, banks providing services to state-licensed cannabis businesses can be subject to criminal and civil liability, as the federal government classifies cannabis as an illegal substance. Accordingly, financial institutions are reluctant to provide services to cannabis businesses operating legally within their state jurisdiction. Forced to operate on a cash basis, cannabis businesses are left vulnerable to criminal targeting. Additionally, law enforcement is less able to track potential financial crimes, and it is more difficult for businesses to pay—and for the state to collect—tax deposits.
In their letter, the Attorneys General note that the enactment of legislation such as the Secure and Fair Enforcement (SAFE) Banking Act would not only bring billions of dollars into the banking sector, but would also give law enforcement greater ability to monitor transactions. Moreover, compliance with tax requirements would be simpler and easier to enforce with a better-defined tracking of funds. This would, in turn, result in higher tax revenue.