Treasury Secretary Janet Yellen said she supports allowing legal cannabis dispensaries to access the US banking system — where they’re now largely barred — 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 if she thought allowing pot firms to use the US banks would facilitate tax collection by the IRS.
“Yes, of course it would,” the Treasury secretary replied.
Large banks have been lobbying lawmakers to support the Secure and Fair Enforcement Banking Act, or SAFE, which would enable banks to access the burgeoning multi-billion dollar cannabis industry.
While the sale or use of marijuana is legal to some degree in 47 states and DC, federal law still prohibits possessing, buying, selling, and using marijuana, which remains classified as a Schedule 1 drug by the Drug Enforcement Agency.
Big banks have been hesitant to do business with legitimate cannabis-based companies for fear of running afoul of federal money-laundering laws. Financial institutions found to have violated money-laundering laws risk having their assets seized and losing their master account with the Federal Reserve.
Treasury Secretary Yellen said that the IRS could more easily collect taxes from marijuana businesses if the firms were able to use big banks, which generally they’re barred from doing at the moment.Getty Images 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. Dispensaries are then forced to process transactions mostly in cash, making them ripe 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 of Representatives has already voted in favor of the stand-alone SAFE legislation five times — most recently in late September.
But the Senate wants to tie the bill to other high-priority proposals including a push for federal legalization of marijuana and expunging criminal records related to cannabis, which requires a much heavier lift to win passage.
Marijuana businesses generally can’t access services at big US banksBloomberg via Getty Images Both US senators from Colorado, a state that has seen a financial windfall since it was among the first to legalize recreational marijuana, are urging Congressional leaders to fold the SAFE Banking Act into the defense bill.
“Current law prevents licensed marijuana businesses from accessing banking services and products — such as depository and checking accounts — resulting in businesses operating all in cash,” Senators Michael Bennet and John Hickenlooper, both Democrats, wrote in a letter last week to colleagues.
“Without federally-approved banking services, state-licensed cannabis businesses cannot write checks, make or receive electronic payments, utilize a payroll provider, or accept credit and debit cards.”