Treasury Secretary Janet Yellen said she supports allowing legal cannabis dispensaries to access the US banking system – where they are now largely denied – to make it easier for the government to collect tax revenue.
Yellen was asked by Colorado Congressman Ed Perlmutter of the House Financial Services Committee on Wednesday whether she thinks allowing sustenance companies to use US banks would facilitate tax collection by the IRS.
The Treasury Secretary replied, “Yes, of course he will.”
Big banks have been lobbying lawmakers to support the Safe and Fair Banking Act, or SAFE, which would give banks access to the burgeoning multibillion-dollar cannabis industry.
While the sale or use of marijuana is somewhat legal in the 47 states and the City of Columbia, the possession, purchase, sale, and use of marijuana still prohibited by federal law, which is still classified as a Schedule I drug by the Drug Enforcement Agency.
Major banks have been reluctant to do business with legitimate cannabis-based companies for fear of contravening federal money laundering laws. Financial institutions found to have violated money laundering laws risk having their assets confiscated and losing their main account with the Federal Reserve.
That has left dispensaries with few options, including relying on smaller banks and credit unions, which charge higher fees to justify taking on more risk. After that, dispensaries are forced to process transactions mostly in cash, making them mature targets for potential criminals, according to lawmakers.
Since legal sales of marijuana began in 2014, states have collectively generated $8 billion in tax revenue, according to the Marijuana Policy Project.
A bipartisan coalition in the House has already voted for the independent SAFE Act five times — most recently in late September.
But the Senate wants to tie the bill to other high-priority proposals including pushing for federal marijuana legalization and deletion of cannabis-related criminal records, which would require a much heavier lift to win passage.
US senators from Colorado, a state that has seen windfall financial gains since it was among the first to legalize recreational marijuana, are urging congressional leaders to incorporate the Safe Banking Services (SAFE) Act into a defense bill.
Senators Michael Bennett and John Hickenlooper, both Democrats, wrote in a letter last week to their colleagues: “Current law prohibits licensed marijuana companies from accessing banking services and products—such as deposit and checking accounts—which results in all businesses running for cash.”
“Without federally approved banking services, state-licensed cannabis businesses cannot write checks, make or receive electronic payments, use a payroll provider, or accept credit and debit cards.”