Ongoing federal marijuana prohibition has created a “real problem” for banks amid the growing state legalization movement, a top Biden administration official says, adding that it would be “desirable” for Congress to pass reform legislation to address the issue.
At a House Appropriations Financial Services And General Government Subcommittee hearing on Thursday, Rep. Dave Joyce (R-OH) asked Treasury Secretary Janet Yellen to weigh in on regulatory complications resulting from the “conflict” between federal and state marijuana policies.
“Can you tell me what is presently this administration’s position on” the Secure and Fair Enforcement Regulation (SAFER) Banking Act, Joyce, co-chair of the Congressional Cannabis Caucus, asked.
Yellen began by saying that her department would “potentially welcome legislation in this area that would clarify for banks what their responsibilities are” with respect to the cannabis industry.
She added that “the fact that marijuana is outlawed by the federal government creates an impediment to [banks’] willingness to provide banking services to cannabis firms, and it creates all the problems that you’re familiar with.”
“I think legislation may be necessary to raise the comfort level that banks have with doing this business.”
Rep. Steny Hoyer (D-MD) also told the secretary that he agrees “100 percent” with Joyce that the issue needs to be resolved. He said that while he’s not personally a cannabis consumer, “it is a shame that the Senate has not passed legislation that we passed in the House” to fix the banking problem.
The Senate Banking Committee approved the SAFER Banking Act last September, but it’s currently pending floor action. To Hoyer’s point, the House has passed earlier versions of the legislation at least seven times in some form over recent sessions.
“We’re putting people in a very vulnerable position where they have large amounts of cash. We’re encouraging criminals to break into businesses that deal in cannabis,” Hoyer said. “I am neither a user nor suggester of using, but the fact of the matter is every state that’s voted on it has made it legal, and I appreciate your work and whatever I can do to help you on there.”
Notably, this is the second time that the former House majority leader proactively voiced his support for cannabis banking reform this week. He also went out of his way to criticize the “contradictory and confusing” status quo during a separate Appropriations subcommittee hearing on Wednesday.
Joyce concluded by asking Yellen whether she’d agree with her Trump administration predecessor, former Treasury Secretary Steven Mnuchin, that the current situation is “untenable.”
“I think it’s a real problem,” she replied. “And it would be desirable to have legislation that alleviated this problem.”
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Yellen has long expressed frustration about ongoing barriers to traditional financial services for the marijuana industry under federal prohibition, saying last year that it is “unfortunately” the case that banks remain reluctant to work with state-licensed cannabis businesses, and it’s something regulators “have been looking for solutions to.”
In 2022, she said that it’s “extremely frustrating” that Congress has so far been unable to pass marijuana banking reform legislation and that Treasury is “supportive” of the proposal.
Yellen has also made headlines recently for lighter news, including her joking during a late night show that smoking marijuana “always helps” when you “get stuck” on a difficult level of the mobile game Candy Crush. (In reality, she said she hasn’t used cannabis since the summer before attending Yale University.)
The secretary also ventured to China last year where she inadvertently ate a “delicious” meal featuring a mushroom with hallucinogenic properties.
On marijuana banking legislation, Senate Majority Leader Chuck Schumer (D-NY) recently recommitted to prioritizing the SAFER Banking Act, telling Marijuana Moment that there have been “very productive” bicameral talks to reach a final agreement.
The chair of the Senate Banking Committee also said recently that passing marijuana banking legislation remains a priority for the chamber, despite political complications in the House. And a top Republican congressman reaffirmed his support for the bipartisan cannabis measure, despite not being “a marijuana guy.”
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