CUs to Congress: Dithering on pot banking harms other industries
In testimony before the Senate Banking Committee on Tuesday, a high-profile credit union executive emphasized the impact confusion surrounding pot banking can have on ancillary businesses.
“Indirect connections to cannabis revenues are hard, if not impossible, for financial institutions to both identify and avoid,” Rachel Pross, chief risk officer at Maps Credit Union in Salem, Ore., said in prepared testimony. “The simple reality is that growers and retailers in the cannabis industry do not operate in a vacuum. Instead, like almost every other business, the industry is dependent upon any number of vendors and suppliers to function. … Under the existing status quo, a credit union that does business with any one of these indirectly affiliated entities could unknowingly risk violating” a variety of federal statutes.
Pross' testimony was part of a Senate Banking hearing on serving the legal cannabis industry, which also included remarks from an American Bankers Association representative, an executive in the legal marijuana industry and more. Pross spoke on behalf of the Credit Union National Association and called on lawmakers to support the SAFE Banking Act, which aims to make it easier for banks and credit unions to serve legal pot businesses – despite the drug’s continued illegal status at the federal level – without fear of reprisals from the Department of Justice.
“Furthermore, the SAFE Banking legislation provides safe harbor to credit unions and their employees who are not aware if their members or customers are involved in this business. We believe this is a reasonable and sound approach,” she added.
Pross addressed lawmakers in the House on this topic earlier in 2019, and her comments before the Senate panel highlighted the public safety aspect of pot banking, including providing financial services for cash-based business to help keep money off the streets and reduce potential public safety risks.
“In the absence of a federal law providing explicit legal clearance for financial institutions to provide banking services to the cannabis industry, it is highly likely that many of these businesses will be forced to continue operating outside of the financial mainstream,” she said in her testimony. “That outcome increases the potential of lost tax revenue, increases the likelihood of criminal thefts in our communities, and deprives both state and federal law enforcement of important information about cannabis activity. We need Congress to resolve the risk financial institutions face by providing a safe harbor for credit unions and banks serving state-sanctioned cannabis businesses.”
She added that the $775 million-asset Maps Credit Union, which provides services to the marijuana industry, estimates it is on track to remove $860 million in cash from Oregon streets within three years thanks to its willingness to serve the marijuana industry.
After Pross’ testimony, the National Association of State Credit Union Supervisors renewed its call for a federal solution to the pot banking conundrum.
“While today’s hearing is an important first step, we once again call on Congress to swiftly pass legislation that would ensure credit unions can serve their members and meet the needs of their communities by providing secure, financial services,” NASCUS President and CEO Lucy Ito said in a statement.