United States – Janet Yellen, the Secretary of the Treasury, said in a speech on Thursday that she would be happy to see bills enacted that would resolve the conflict between state and federal law that is currently preventing cannabis companies from banking.
Cash-Only Operations
Asked at a U.S. House of Representatives Appropriations subcommittee hearing about the issue, which forces cannabis businesses to hold large amounts of cash, Yellen said, “I think it’s a real problem, and it would be desirable to have legislation that alleviates this problem.”
Republican David Joyce said his suggestion to the current Secretary of Treasury, Steve Mnuchin, was made five years ago, and the situation is similar to what it was then, as reported by Reuters.
Thirty-eight states have technically approved marijuana for medical and 24 for its recreational use, but cannabis is still sold against federal law.
Many financial institutions wary of breaching AML regulations are refraining from the business, leading to cannabis sales at cash-only shops that pose security risks to workers and limit access to financing.
Moreover, Yellen has previously noted that this problem makes it difficult to levy taxes on cannabis firms.
“I think we would potentially welcome legislation in this area that would clarify for banks what their responsibilities are,” Yellen said in response to Joyce’s question about her position.
“The fact that marijuana is outlawed by the federal government creates an impediment to (banks’) willingness to provide banking services, services to cannabis firms, and it creates all the problems that you’re familiar with,” she said.
Challenges to Taxation and Economic Viability
However, Yellen explained neither the provisions she deemed to be fundamental for the bill’s effective creation nor an act passed by the U.S. Senate Committee on Banking last year that is directed at expanding the industry’s access to traditional banking services.
“I think legislation may be necessary to raise the comfort level that banks have in doing this business,” she said.
Democratic Representative Steny Hoyer expressed his readiness to help Yellen and Republicans on the House side pass the same legislation, which is seen as crucial because the business and employees could go under as a result, as reported by Reuters.
“I am neither a user nor a suggester of using. The fact of the matter is every state that voted on it has made it legal. Every state,” Hoyer said.