10 under the federal Controlled Substances Act, effectively ending federal prohibition and opening the industry to more traditional banking services and capital opportunities. This is the second time the House has approved the MORE Act. The Senate, however, turned the amendment down. Cannabis banking legislation was not included in the final version of the United States Innovation and Competition Act (The America COMPETES Act). Even though the U.S. House of Representatives formally attached the SAFE Act as an amendment to large-scale legislation dealing with innovation and manufacturing in February, the Senate’s final version of the legislation did not include that provision. In what may be a last-ditch effort, financial trade associations are urging U.S. House leadership to add the SAFE Banking Act to H.R. 7990, the fiscal year 2023 National Defense Authorization Act as sponsored by Representative Perlmutter (Colorado). Given prior action by the U.S. Senate, it appears unlikely that the Senate would approve the amendment even if inserted in the National Defense Authorization Act by the House. The majority of the states, 37 including New Mexico, have legalized cannabis for medical or adult use. Nevertheless, federal law still defines cannabis as an illegal drug under the Controlled Substances Act and, as a result, all proceeds generated by a cannabis-related business can be considered unlawful for banks to process. Even accepting a cannabisrelated deposit can be considered money laundering. The problem extends to any entity that derives revenue from a cannabis firm, including real estate owners, security firms, utilities, and other vendors and investors. That puts banks in the difficult position of either potentially violating federal law or refusing services to a significant legal sector of their local economies. But excluding the cannabis industry from the banking system has serious consequences for the communities where they operate. Cannabis businesses are handling increasingly large amounts of cash - even paying their state taxes and licensing fees in cash - creating public safety and accountability issues for the industry. The SAFE Banking Act is designed to bring the cannabis industry into the regulated banking system and provide visibility into its financial activity. Financial institutions adhere to stringent anti-money laundering and counter-terrorist financing reporting requirements, as well as monitor accounts for The increased transparency that would come from processing transactions through bank accounts instead of in cash would ensure that regulators and law enforcement have the necessary tools to identify bad actors and remove them from the marketplace. The legislation would also enhance tax collection in the states where cannabis is now legal. suspicious activity. The increased transparency that would come from processing transactions through bank accounts instead of in cash would ensure that regulators and law enforcement have the necessary tools to identify bad actors and remove them from the marketplace. The legislation would also enhance tax collection in the states where cannabis is now legal. n n continued from page 9
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