House Votes To Allow Banking Access For Marijuana Businesses

House Votes To Allow Banking For Marijuana Businesses

Signaling growing acceptance of cannabis legalization nationally, the House of Representatives voted on Wednesday to allow banks to provide traditional banking services to marijuana businesses that are legal under state law.

Sponsored by Reps. Denny Heck (D-Wash.), Dana Rohrabacher (R-Calif.), Ed Perlmutter (D-Colo.) and Barbara Lee (D-Calif.), the amendment to the Financial Services appropriations bill prevents the Treasury Department from spending funds to penalize financial institutions that provide services to state-legal marijuana businesses. The amendment passed with bipartisan support, 231 to 192.

The House also rejected an amendment, sponsored by Rep. John Fleming (R-La.), that would have blocked Department of Treasury guidelines issued back in February that are intended to increase banking access for pot shops.

“Congress is yet again rejecting the failed war on marijuana,” Bill Piper, director of national affairs for the Drug Policy Alliance, said in a statement. “They have read the poll numbers and are doing both what is right and what is politically smart.”

Due to banks' fears of being implicated as money launderers, marijuana-related businesses are often forced into cash-only transactions, putting retailers' safety at risk and creating issues involving taxes and employee payroll. Despite the Treasury Department's guidance, most banks are still extremely wary of working with marijuana businesses since the plant remains illegal under federal law.

“While we appreciate the efforts by the Department of Justice and FinCEN, guidance or regulation doesn’t alter the underlying challenge for banks," Frank Keating, the president and CEO of the American Bankers Association, told HuffPost regarding Treasury's earlier guidance. "As it stands, possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution and assorted sanctions.”

Perlmutter, who has been paving the way to make it easier for banks to transact with marijuana-related businesses if they choose, said in February that safety should be a top concern of federal officials and banking regulators.

"The crime potential for an all-cash businesses, whether that’s robbery, burglary or assault -- a violent crime -- or tax evasion, fraud and skimming -- a white collar crime -- is pretty substantial," he said. “At the heart of the banking and tax issue is we want these businesses to be safe."

Wednesday's vote follows a House vote in May to block the Drug Enforcement Administration from using funds to target medical marijuana operations that are legal under state laws. The same day, the House passed two additional amendments prohibiting the DEA from interfering with state hemp laws.

"It's clear that cannabis reform is having a very good year in Congress," said Marijuana Majority's Tom Angell.

While the banking measure passed easily in the House, it must now pass the Senate, where the medical marijuana protections measure still languishes.

In 2012, Colorado and Washington legalized marijuana for recreational use, while medical marijuana is legal in 23 states and the District of Columbia. About a dozen more states are expected to legalize marijuana in some form in the coming years. And for the first time ever, a majority of Americans nationwide support the legalization of marijuana, according to a recent poll.

The legal marijuana industry is expected to grow to $2.3 billion in the U.S. in 2014. One study suggests that figure could balloon to over $10 billion by 2019.

Read the text of the amendment that passed:

None of the funds made available in this Act may be used, with respect to the States of Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Washington or Wisconsin or the District of Columbia, to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, producer, or a person that participates in any business or organized activity that involves handling marijuana or marijuana products and engages in such activity pursuant to a law established by a State or a unit of local government.

CLARIFICATION: An earlier version of this story suggested that Rep. Perlmutter believes banking for marijuana businesses should be mandatory. However, the congressman believes banks should be allowed to transact with marijuana businesses if they choose to do so. This story has been updated to reflect that position.

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