Transcripts For CSPAN Senate Banking Hearing On Banking Chal

CSPAN Senate Banking Hearing On Banking Challenges For Cannabis Store Owners July 14, 2024

The committee will now come to order. Before we start, we have two witness panels. Senator brown and i will give our opening remarks and then we will hear from Senators Gardner and merkley. Once the senators have finished their statements, we will proceed with our second panel of witnesses. Today, we will hear from witnesses about the challenges that state sanctioned businesses havee cannabis business when attempting to access mainstream Financial Services. Marijuana or cannabis is currently considered a schedule one drug. Being categorized as a schedule one drug means that distribution, sale, of marijuana or marijuanadrug products is illegal under federal law, and any proceeds from cannabisrelated activities remain subject to u. S. Andnt laundering laws, such as the antilaundering control act. In the last several years, many states have used referendums that have legalized the marijuana and some form, whether recreational or medical use. Currently, there are 11 states, plus the district of columbia, where it is legal to buy and consume Recreational Marijuana and medical marijuana. 22 states, plus d. C. With approved medical marijuana, totaling 33 states and all that have some form of Legal Marijuana. Senators gardner and merkley have introduced Bipartisan Legislation that attempts to ease some of the difficulties resulting from marijuanas illegal status and more lenient state laws. Times withen many senator gardner on this bill and appreciate the hard work each senator has been on this legislation. I look forward to hearing from each of you soon. Our second panel of witnesses will highlight challenges institutions face and banking different parts of the Marijuana Industry, how marijuana related is this is operate, and the complications they have that they have faced in accessing Financial Services, and finally how the safe banking act would work. We will also hear concerns over advocates pushing to legalize safeuana, the effects of banking act in light of marijuana continuing to be illegal under federal law, and health harms and addictions marijuana can lead to. After understanding with the safe harbor would do, what compliances would become and the challenges presented when banking legacy cash, specifically ensuring legacy cash complies with defense and guidance. Having a conversation about whether banks should be able to provide Banking Services to illegal behavior, which is legal in some states, rings up an issue and concern of mind that there has been a big push to choke out Legal Industries from the banking sector. I have said many times, and i will say it again. Operation chokepoint was deeply concerning to me because lawabiding businesses were targeted for operating in an industry at some of the government disfavored. Under fear of retribution, many banks have stopped providing Financial Services to many of these lawful industries for no reasons other than political pressure, which takes the guise of regulatory and enforcement scrutiny. Is anion chokepoint appropriate and Congress Needs to pass legislation to prevent future operation chokepoint initiatives. Senator brown . Senator brown thank you, chairman and senators. Over the past years, voters and legislatures nearly every state have to some degree legalized and decriminalized cannabis. In my state, dispensaries opened earlier this year. It is one of the Fastest Growing in the United States and employs hundreds of thousands of people, any of whom are represented by unions like the united fruit and commercial workers in our union. These americans work hard to support themselves and their families, like workers and other, and they deserve the same rights and protections in states like ohio. Workers and businesses find it difficult to access the Banking System, and that puts them in the americans they do business without risk. No matter how you feel about marijuana, we have a duty to look out for the workers who work in this industry and represent their communities. Dealing in large amounts of cash puts a robbery target on workers, could make it harder to monitor transactions in combat Money Laundering. Getting paid in cash means it is difficult to get i prefer the income to get a loan. Back in force workers to turn to like paydays lenders and Check Services that charge high fees and interest rates, trapped people in a cycle of debt, and make low income people even poorer. Companies and workers who have found a bank willing to handle the business pay high fees and are limited to basic Financial Services. The problem is not just affect cannabis industry but people might not think of. Electricians,ers, Service Retail locations, and other facilities. Lawncare and gardening Companies Like scotts miracle growing in ohio, cell materials and equipment, and all businesses want to serve their customers and support workers without losing their longstanding banking relationships in the process. Community banks and Credit Unions in ohio, and other states want to serve the cannabis industry in these communities. When i recently met with members of the Committee Bank association of ohios, and ohio bankers leanne Credit Union League earlier this year, nearly every hand shot up when i asked if it affected them. We know it comes with legal and supervisory risks because of the tension, as the chairman said, between federal and state laws. It requires extra layers of Due Diligence, challenging it costly for banks and Credit Unions. They play a key role in monitoring for fraud and Money Laundering and the Financial System, and other legal illegal activities. It is important we maintain the framework and access to the Banking System is essential to keep our communities safe and ensure full participation in the economy. We cannot continue to ignore this industry that thousands of workers and communities it affects. We also know that todays hearing is just one piece of the conversation. Ongress must have them marijuana policy. People should not have their jet birders their futures jeopardized by nonviolent marijuana offenses. Let me say that again. People should not be thrown in jail or have their futures jeopardized by a criminal record over nonviolent marijuana offenses. Everyone should have access to the edison they need to cure themselves and their families. I look forward to hearing the perspectives of our witnesses. Chairman thank you. We have two witness panels today. On panel one, will receive testimony from cory gardner of colorado and the honorable jeff merkley of oregon. On panel number two, we receive testimony from ms. Rachel press, the chief risk officer of matz credit union, miss joann sherwood, president and ceo of citywide banks, mr. Garth van meter, Vice President of Government Affairs of smart approaches to marijuana, or sam, and mr. John, ceo and owner of late well enlightened health. Senators gardner and merkley, you may proceed. Senator gardner thank you, mr. Chairman and Ranking Member brown and everyone on the panel for the opportunity to speak to today. This is a difficult hearing and topic. I know that. We were sent here to deal with difficult topics. Im grateful for the opportunity to talk about this. It is the first hearing we have had on this issue as the federal government wakes up to the reality that the cannabis issue is not going to go away, and we must have action. There has been a dramatic shift in americans views over cannabis. Polling shows 55 of americans support legalization of marijuana. 93 , 93 of the American Public medical marijuana. Both parties support legalization. At a time when talk is about how divided we are, we are remarkably united on this issue. Shouldhat support, it not be surprising the vast majority of states have changed their laws. 47 states now allow some form of cannabis. I recognize idaho, nebraska, and south dakota who have not. Than 95 ofnts more the population living in states with laws allowing some form of cannabis. 33 states have legalized medical marijuana and allowed related adult years. It is happening in the bluest of blue, the reddest of red and in colorado, the purple list of purples. It happens in oregon, massachusetts, california, and colorado, alaska, and maine. It happens in conservative states like north dakota and georgia, and rust belt states like pennsylvania and ohio. Last year alone, missouri, michigan, oklahoma, utah, and vermont adopted or expanded marijuana programs. In short, the states leading states leadinghe on this issue in the federal government has failed to respond. It has closed its eyes and covered its ears to hope that she would go away, but it will not. The disconnect has become, as the attorney general has testified, intolerable and untenable. The dramatically expanded cannabis industry presents real challenges for our nation. I have been a skeptic about legalization. I opposed it in colorado. I was concerned about the effects of legalization on Public Safety and breaking with the federal government and adding another intoxicants into our culture. And i did not and still do not want to encourage my children to use marijuana. Several years into legalization in colorado, i can say this guy has not fallen. There are challenges. Colorado has seen an increase in transient populations and concerns of hospitalizations. And cannabis has been illegally trafficked into neighboring states. But according to a pediatrics report, youth use is about 10 lower in legalized states. One strong theory as to why that is the case is legal dispensaries force out illegal sellers and enforce age limits, so youth have less access to marijuana. Are mixed. Crime marijuana offenses are down. Colorado has experienced an increase in violent crime, likely driven by the increase in transient populations in the state. At the same time, they have brought in over 1 billion in tax revenue. They received more than 260 six mayan dollars last year and 266 millionxes dollars last year and marijuana taxes, many ending up for the schools. What makes the Current Situation in tenable is the disconnect between federal and state law. For instance, every single and of his cannabis transaction in colorado was illegal, meaning the dollars involved are the money underunlawful federal statutes. That means any money that collects to legitimate business, plumbers, accountants, landlords, risk becoming federal criminals for serving a client legal under colorado law. The 1. 5 means with billion industry a year in colorado is nearly all cash. Banks will not accept industry money for fear of federal four for keeping those dollars at a banks means we lose the ability to trace whether dollars go and it is harder to ensure all taxes are paid. It makes it easier for criminals and the illicit market to pose as a legitimate and leaves hundreds of thousands of dollars of cash in the state. The state department of revenue has one location only to accept cash so Business Owners in the western part of the state have to drive with tens and thousands of dollars in cash to pay their taxes. It creates a safety problem. They become targets for thieves. A marine was tragically shot and killed on duty as a Security Guard at a dispensary. We are making it hard for businesses to comply with the law. A partner at a Major National law firm told me the Bank Accounts were going to be shut down because they counseled state Legal Cannabis clients. I also heard from city officials in california. For them, lack of inking means when they taken it one milliondollar bond for cannabis business, it takes days to count the cash and several employees after normal work with extra Security Guards in their offices. All of this scratches the surface of the financial problems caused by the disconnect. Veterans, or the epa refusing to use marijuana on pesticides, or confusion created for Law Enforcement or the other problems that contribute to this tenable situation, congress simply must act. Our failure to act seems to be grounded in two incorrect assumptions. The first is we can continue prohibition. We cannot. We are a government of the people, and the people have changed their views, so our laws must change. The second is we can come to a National Consensus for full legalization in the future. We cannot. There are still too many unanswered questions. Many states have legitimate concerns. If they insist on swinging for the fences, they will lose the chance for real improvement. I believe senator merkley recognizes this and i appreciate his efforts to provide concrete improvements for the financial industry with a safe banking act, and i believe senator warren recognizes this. I appreciate her effort to allow the states to move at their own pace, and i thank you, mr. Brown,n, ranking chair that we will act. Thank you for the opportunity to speak. You. Man crapo thank senator merkley . Senator merkley thank you for holding this hearing. We have a fundamental conflict regarding states rights and federal rights. It was back in 1996 that oregon developed a Medicinal Marijuana program. That is a long time ago. We are talking 23 years. Have seent time, we the nation has changed in many states have exercised their state rights, their state rights, to address what they felt was in the best interest of their citizens, but there is a heavy hand in the federal government here trying to make life as miserable as possible for citizens across our nation. So our basic argument is lets stand with states rights, with the judgment from across the that individuals or legislators are doing the best they can for their people, and not proceed to create a federal chaos that is good for Money Laundering and for organized robbery, andod for good for cheating on your taxes, and good for cheating on your payroll but bad for citizens. Lets correct this problem in this fundamental relationship. Im delighted that one of my constituents, rachel cross of the credit union, is here to testify about the viewpoint from our state, but across the country, businesses operating legally under state laws are faced with banking challenges. Major passed their ballot of the vote of the people way back, 23 years ago, and in 2014, past another, regulating adult use cannabis. However, these cannabis businesses and other related businesses, lawyers, landlords, have been operating in all cash without access to Bank Accounts. I have 129 stories from oregon and across the nation i would like to submit for the record, mr. Chairman. Chairman crapo without objection. Senator merkley among the stories, one regards a certified Hemp Processing lab. Hemp. We chose, as congress federally, to legalize hemp as an ordinary yearsoduct and last farm bill. Unfortunately, this provision we have regarding cannabis has been extended in many cases to hamper the ability of the hemp agricultural industry, which is exploding across the country, to operate with our financial normal services. And an attorney in Portland Oregon had portland, oregon, had two Bank Accounts closed because of providing legal services. Do we want situation where citizens operating under states rights, under the best interest of their citizens as judged by their states, are unable to access Attorney Services . That is not by provision acceptable under the law. Forcing legal businesses to operate in all cash is dangerous. I saw this when i joined an Oregon Business man on a trip to our state capital to pay his tax bill. He had his quarterly payment of 70,000 in a backpack. He turned it over on the table and it spread out across the whole table and some of it fell onto the floor. That is a lot of money to carry around in a backpack. We then drove to the state capital one had to go through three levels of security for him to be able to pay his taxes. As you approach the building, there were police cars, patrol members, and then they would tell you which florida go to, and then you had another set of security in the rumor you deposited it, because millions of dollars of cash were flowing in from all corners of the state. This is one of the most absurd things i have ever witnessed, and it created there are a lot of costs that reverberate back to the industry that are really unfair and unacceptable and dangerous. We are putting safety at risk when companies are conducting themselves legally under state passed legislation, state rights. So many constituents have reached out to share their stories. That is why we are delighted you are holding the hearing, for a chance to present the stories to the committee for consideration. I believe i appreciate the work of the cannabis association, the industry association, and normal, the National Association for marijuana laws for sharing and submitting the stories for the record. Across the country, more and more states are following the example established in the initial states more than two decades ago. Red states, blue states, purple states, whether it allows the cultivation of hemp and remedies, such as cvd, it was legalized in the 2018 farm bill, or taxing and regulating medicinal and adult use cannabis. In my

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