If you live in any of the nine U.S. states that support recreationally legal cannabis legislation like California, Alaska, Colorado, Maine, Massachusetts, Nevada, Oregon, Vermont, and Washington, it becomes simple to forget that the use and possession of cannabis is a federally illegal offense.
The Controlled Substance Act of 1970, signed into law by Richard Nixon, classifies cannabis as a schedule 1 drug – with a “high” potential for abuse and zero accepted medical use. Despite this, another 13 states have decriminalized cannabis, and 29 more have legalized medical use, including Guam and Puerto Rico. According to these states and territories, all you need is a doctor’s recommendation to buy and possess medicinal cannabis.
Outside of Vermont and the District of Colombia, commercial distribution of cannabis is allowed where the recreational use of cannabis has been legalized. That means that in 8 states, Cannabis businesses are up, running, and for the most part, profitable. But because of the conflict between states and federal law, the United States Congress is grappling with the legality of how and where these companies manage and store their money.
That saga continued last Wednesday, when the U.S. House of Representatives’ Appropriations Committee voted down an amendment designed to protect banking institutions that are willing to work with cannabis business.
The measure would have assured banks from the federal government that they wouldn’t be closed down by the Treasury Department. Rep David Joyce was the primary sponsor of the amendment, and emphasized public safety and financial transparency as the most important issues.
Because of its federal status as a schedule 1 drug, banks have been hesitant to accept money coming from the marijuana industry. That means many cannabis companies are forced to transact with and store large quantities of cash themselves. The unexpected consequences may include higher probability for robberies, questionable accounting practices, and ultimately a more dangerous work place for employees and market for customers.
Despite Wednesday’s setback, the number of banks willing to work with cannabis businesses continues to grow. According to a report from the Treasury Department’s Financial Crimes Enforcement Network(FinCEN), 411 banks and credit unions in the United States operate accounts for Marijuana businesses. That number is up from 318 in October of 2016.
“This is a complicated issue. We are actively looking at this,” says Treasury Sec. Steven Mnuchin, the Trump administrations top fiscal official. “I assure you that we don’t want bags of cash. We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe.”