Marijuana derived products is illegal under federal law. Theyre subject to antiMoney Laundering laws such as the Money Laundering control act. The last several years many states used Ballot Initiatives or referendums that legalized marijuana in some form whether for recreational or medical use. Currently there are 11 states plus the district of colombia where it is legal to buy and consume Recreational Marijuana and medical marijuana as well. And there are 22 states plus d. C. That have approved medical marijuana totaling 33 states in all that have some form of Legal Marijuana. The senators introduced Bipartisan Legislation that attempts to ease difficulties resulting from the legal status and more lenient state laws. I spoke many times with senator gardiner on this bill and appreciate the hard work that each senator has done on this legislation. And i look forward to hearing from each of you very soon. Our second panel of witnesses will highlight challenges that institutions face in banking different parts of the Marijuana Industry. How marijuana related businesses operate and the complications they have that they faced in accessing Financial Services finally, how the safe banking act would work. Well also hear concerns over advocates pushing to legalize marijuana, effects of safe banking act in light of marijuana continuing to be illegal under federal law and health harms and addictions that marijuana can lead to. I look forward to learning more about the safe banking act and understanding how the safe harbor would work, what the compliance challenges relating to interstate commerce could be and the challenges with cash ensuring that the legacy cash complies with the guidance. Having a conversation with whether banks should be able to provide Banking Services to entities engaged in federally illegal behavior but behavior which is legal in some states brings up an issue and concern of mine that has been a big push where we have seen a big push to choke off legal striz from tind the banking sector. I said many times and i will will say again, operation choke point is concerning to me because law abiding businesses were targeted strictly for operating in an industry that some in the government disfavored. Under fear of retribution, many banks stopped providing Financial Services to members of the lawful industries for no reason other than political pressure which gays ttakes the of regulatory scrutiny. Operation choke point was inappropriate and Congress Needs to pass legislation to prevent future operation choke point initiatives. Senator brown . I thank you, mr. Chairman. Senators, welcome into the second panel. Over the past several years, voters and legislatures in nearly every state have to some degree legalized or decriminalized cannabis. In my state of ohio, medical cannabis is legal, dispensaries opened earlier this year. The Legal Cannabis industry is one of the Fastest Growing in the United States. It employs hundreds of thousands of people, many of whom are represented by unions like the united food and commercial Workers International union. These americans work hard to support themselves and their families just like workers in any other industry, they deserve the same rights and protections in states like ohio. These workers and businesses find it difficult to access the Banking System. That puts them and the americans they do business with at risk. No matter how you feel about marijuana itself, we have a duty to look out for the workers that work in this industry and for the communities they represent. Access to Banking SystemLegal Cannabis businesses are forced to operate in the shadows dealing in large amounts of cash, puts a robbery target on the backs of workers, creates a safety hazard for communities and can make it harder to monitor transactions and combat Money Laundering. Getting paid in cash means its difficult to get a credit card, prove your income, get a loan, keep your personal bank account. They can force that can force workers to turn to shady outfits like pay day lenders and Check Cashing services that charge high fees and interest rates, trap people to cycle of debt and make low income people even poorer. Companies or workers that found a bank willing to handle business often pay high fees and are limited to only the most basic Financial Services. The this problem doesnt just affect the cannabis industry, ate infec it affects plumbers, welders, electronics, Service Retail locations and other facilities. Lo lawn care and lard ening Companies Like scotts miracle grow in ohio sell materials and equipment, all these businesses want to serve their customers and support their workers but they dont want to lose their long standing banking relationships in the process. Community banks and Credit Unions in ohio and in other states want to serve the Cannabis Industries in these communities. N when i recently met with members of the Community Bank association of ohio and the Ohio Bankers League and Ohio Credit Union league earlier this year, nearly every hand shot up when i asked if this affected them. We know the industry 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 and costly for banks and Credit Unions. They play a key role in monitoring fraud and money laund laundering and other illegal activities. We have to maintain our framework and access to the keep our Community Safe and to ensure full participation of the economy. We cant continue to ignore this industry in the thois andz of workers and communities that it affects. We also know that todays hearing is just one piece of the conversation. Congress must have on marijuana policy. People should not be thrown in jail or have their futures jeopardized by a criminal record over 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 medicine they need to care for themselves and families. Im looking forward to hearing the perspectives of our witnesses, mr. Chairman. Thank you, senator brown. As i mentioned previously, with very two witness panels to day. On panel one, well receive testify from the honorable senator Corey Gardiner of colorado and the honorable senator jeff merkley of oregon. Panel two we testify testimony from the chief risk officer of Maps Credit Union. Mrs. Joanne 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 lord, ceo and owner of live well enlightened help. Senators gardiner and merkley, you may proceed. Thank you, mr. Chairman, thank you Ranking Member brown and everyone on the panel for the opportunity to speak to before you today. This is a difficult hearing. Difficult topic. I know that. We were sent here to deal with the difficult topics and im grateful for the opportunity to talk about this today. Its an important step forward. First hearing weve had on this issue as a federal government wakes up to the reality that the cannabis issue is not going to go away. And we must have action. Theres been a dramatic shift in americans views of cannabis. 65 support legalization of marijuana. 93 , 93 of the American Public support medical marijuana. In fact, majorities of both parties support legalization. And in a time when all the talk about about how divided we are in a country, we are remarkably united on this issue. Given that support, it shouldnt be surprising the vast majority of states have changed their laws. 47 states now allow some form of cannabis. I recognize that my good friends from the three that have not, idaho, nebraska and south dakota. On this committee. That represents more than 95 of our population living in a state with laws allowing some form of cannabis. 33 states legalized medical marijuana. It is happening in the bluest of blue states, reddest of red and in colorado purples of purples. It is happening in progressive states like oregon, massachusetts, and california. Its happening in independent states like colorado, alaska and main. It is happening in conservative states like north dakota and georgia. Its happening in rust belt states like pennsylvania and ohio. Last year alone, michigan, missouri, oklahoma, utah, and vermont all adopted or expanded marijuana programs. In short, the stakes leading on this issue, the states that are leading on this issue. And the federal government has failed to respond. It is closed its eyes and plugged ears and pretended and hope the issue just go away. It wont. The disconnect between federal and state marijuana laws has become as the attorney general has testified both intolerable and untenable. The dramatically expanded cannabis industry presents real challenges for our nation. Ive been a skeptic about cannabis legalization. It noes secret i opposed legalization in colorado. I was concerned about the effects of legalization on colorados youth and Public Safety. I was leery of breaking with the federal government. I was uneasy about adding another intoxic into our culture. I do not want to encourage my own children to use marijuana. Several years into legalization i can say that sky has not fallen. The there are challenges to be sure. Colorado is seen increase in transit populations. There are concern about traffic and safety. According to a recent pediatrics report, youth use is 10 lower in legalized states. One strong theory why that is the case is legal dispensaries force out illegal sellers and enforce age limits. So youth actually have less access to marijuana. The data on crime are mixed. Marijuana offenses are down. Colorado experienced increase in Violent Crime because of transient populations moving to the state. At the same time, the state has brought in over 1 billion in tax revenue. Last year alone they received more than 266 million in marijuana taxes. Millions of those dollars are ending up in colorado schools. In short, the sky is not falling in colorado. Instead what makes the Current Situation intolerable is the disconnect between federal and state law. For instance, every single state Legal Cannabis transaction in colorado is federally illegal. That means the dollars involved are the proceeds of an unlawful transaction under the federal Money Laundering statutes. That means that all the different parts of our economy that connect to any legitimate business plumbers, electronics, lawyers, accountants, landlords, et cetera, risk being federal criminals for serving a client under colorado law. That means the industry a year in colorado is nearly all cash. Banks will not accept industry money for fear of recollect torre action or federal forfeiture keeping the dollars out of banks means we lose at built to trace where the dollars go. It also means that it is harder to ensure that all taxes are being paid. It makes it easier for criminals and the market to pose as legitimate. And it leaves hundreds of millions of dollars in cash in the state. For example, the state department of revenue has one location that accepts cash, just one location. So Business Owners in the western part of the state often have to drive five or more hours with tens of thousands of dollars in cash just to pay their taxes. The cash creates a genuine Public Safety problem. Stockpiles of cash make the industry a target for thieves. A 24yearold former marine was tragically shot and killed while on duty as a Security Guard at a dispensary. And were making it hard for the businesses to comply with the law. A few as ago a partner at Major NationalLaw Firm Says the firms Bank Accounts were going to be shut down because they counsel state Legal Cannabis clients. Ive also heard from city officials in the town of desert hot springs, california. Lack of banking means when they take in a Million Dollar bond for cannabis business, i takes days to count the cash. It takes employees off the normal work and requires extra Security Guards in the offices. All of this is just scratching the services of the Financial Services problems caused by the federal state disconnect. I mention the problems with researches and there is confusion created for Law Enforcement or any of the other myriad of problems that contribute to this intolerable situation. Congress simply must act. Our failure to act is in two incorrect assumptions, the first is we can continue prohibition. We cant. Were a government of the people and the people have changed their views. So our laws must change. The second is that we can come to a National Consensus for a full throated legalization in the near future. We cant. There are still too many unanswered questions, many states that have legitimate concerns, if those seeking reform insist on swinging for the fences, theyll strike out and lose the chance for real improvement. I believe senator merkley recognize this is. The i appreciate his efforts to provide real concrete improvement for the service with the safe banking act eni believe that senator war eren recognize this is. They move at their own pace with the states act. I believe you, mr. Chairman, rank member mr. Brown, my prendz friends on the committee that we must act. Thank you for the hearing and thank you for the opportunity to speak with you all today. Thank you, senator gardiner. Senator merkley . Thank you very much, mr. Chairman, for holding this hearing. We have a fundamental conflict regarding states rights and federal rights. It was way back in 1996 that oregon developed a Medicinal Marijuana program. So thats quite a long time ago. Were talking 23 years. During that period, we have seen that the nation has changed. And 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. So our basic argument is lets stand with states rights. Lets stand with the judgement from across the nation that individuals are doing the best this he can for their people and not proceed to create a federal chaos that is good for Money Laundering and its good for organized crime. Its good for treating on tachs and good for cheating on payroll, but its bad for citizens. Im delighted that one of my constituents is here and is here to testify that the view from our state but across the country businesses operating legally under state laws are faced with banking and safety challenges. Oregon passed their ballot measure and for the use of cannabis and vote of the people way back 23 years ago. And in 2014, passed another measure legalizing and regulating adult use cannabis. However, these cannabis businesses and other related companies that serve the industry landlords, lawyers, security companies, others have been operating in all cash without access to Bank Accounts. I have here 129 stories from oregon and from across the nation that id like to submit for the record, mr. Chairman. Without objection. Id like to note that among the stories, one is regarding a certified hemp p n processing lamp. Unfortunately, this provision that we have regarding has an extended in many cases to completely hamper the ability of the hemp Agricultural Industry which is exploding across the country to be able to operate with our normal Financial Services. Andrew, an attorney in portland, oregon, had two Bank Accounts clos closed because of providing legal services. Do they want to operate under states right and operating in the best interests of the citizens as judged by the states . Are they unable to access attorney services. That is not a provision acceptable under the vision of equal justice under the law. Forcing Legal Businesses to operate in all cash is dangerous for our communities. I saw this with my own eyes when i joined an oregon businessman on a trip to our state capital in salem to pay the tax bill. He had the quarterly payment of 70,000 in a backpack. It spread across the whole table and some fell on to the floor. Its like wow, that is a lot of money to carry around in a backpack. We then drove down to the state capital and had to go through three levels of security for him to be able positive pay his taxes. They wouldnt, as you approach the building, there were police cars and patrol members and t