Pub. 10 2019 Issue 3

www.wvbankers.org 18 West Virginia Banker W est Virginia, 32 other states, the District of Colum- bia, Guam, and Puerto Rico have all legalized the use of marijuana to some degree. But possession, distribution, and sale of marijuana are still illegal under fed- eral law. Any money transacted directly or indirectly through a marijuana business could be subject to federal anti-money laundering laws and could therefore also expose a bank to significant risks. The risks are widespread and extremely difficult to identify. In addition to growers and retailers, there are vendors, suppliers, landlords, and employees that are all linked to the cannabis industry, making it extremely difficult, if not impossible, for banks to identify and avoid them. The disparity between state and federal law leaves banks holding the bag between their mission to serve the financial needs of their customers and the threat of federal regulatory action. With an ever-increasing number of states allowing the sale and use of cannabis, the time has come for Congress and the federal regulatory agencies to provide guidance and a clear path forward for banks to serve what their state govern- ments have deemed legitimate business enterprises within their communities. The Secure and Fair Enforcement or “SAFE” Banking Act, which, on March 28, 2019, became the first major piece of cannabis banking legislation ever to make it out of a congres- sional committee, would, among other things, prohibit federal banking regulators from penalizing financial institutions and their employees for serving marijuana businesses that operate in compliance with state law. The bill also protects ancillary enterprises from legal action and protects property and assets from forfeiture. With almost half of the members of the House of Representatives signing on to co-sponsor the bill, it may get a vote on the floor of the House in the future. West Virginia 2nd District Congressman Alex Mooney supported the bill in committee but neither Reps. Mooney, Miller or McKinley, from West Virginia, have signed on to co-sponsor the bill. The Senate is a different story. The 2020 primary election for the United States Senate poses major political hurdles to getting anything done in Congress for the next year or so. Many Republicans, who hold a slim three-vote majority in the U.S. Senate, remain reluctant to support any effort that seems to advance legalization for fear of alienating voters who oppose legal cannabis in all its forms and emboldening primary challengers to their right. It is a tight spot to be in for Republicans who have traditionally championed the federalist ideal of the right of states to govern themselves over federal infringement. In this case at least, it seems that 33 of the state legislatures have spoken but so far, only Sens. Kevin Cram- er, R-North Dakota, Lisa Murkowski, R-Alaska, Dan Sullivan, R-Alaska, and Rand Paul, R-Kentucky, have signed on to sup- port the SAFE Banking Act, and of them, only Senator Cramer serves on the Senate Banking Committee. Congress should heed the call of their state legislatures and act now to create sound legal pathways for our state and our na- tion’s banking institutions to serve the legal cannabis market.  Time to Act on Banking Cannabis By Loren C. Allen, WVBankers General Counsel and Director of Government Relations Loren C. Allen is General Counsel and Government Relations Director for the West Virginia Bankers Association (WVBA).