WASHINGTON–A credit union executive here told the Senate Banking Committee it’s time for Congress to pass the SAFE Act, as the current situation related to banking cannabis businesses is a growing safety and risk concern.
Rachel Pross, chief risk officer with Maps Credit Union, told the Senate Banking Committee during a hearing on “Challenges for Cannabis and Banking: Outside Perspectives” there are numerous reasons to act. Maps CU is based in Salem, Ore., a state that has legalized cannabis. Like others appearing before the Senate, including a representative of the American Bankers Association, Pross called on Congress to pass legislation to provide a “safe harbor” and remove the federal prohibitions on serving cannabis businesses in states where is has been legalized.
Maps has served the cannabis industry since 2014 and is the only financial institution in the state to have done so continuously, she said.
Testifying on behalf of CUNA, Pross said her credit union has seen and experienced first-hand the many challenges facing both financial institutions and state-sanctioned cannabis businesses seeking to operate within the financial mainstream.
As Pross earlier told the House in prior testimony, she said the lack of access many cannabis businesses have to financial institutions is a safety issue that increases crime and puts people at risk. She noted that in 2017 and 2018 alone, Maps received well over $529 million in cash deposits from cannabis businesses, and to date in 2019 hasreceived another $169 million in cash deposits, “meaning that we are on track to remove over $860 million in cash from the sidewalks of Oregon’s communities in just three years.”
‘Millions’ in Backpacks
“That’s millions of dollars that used to be carried around in backpacks and shoeboxes by legitimate, legal business owners in the State of Oregon, making them prime targets for thieves and other criminals,” said Pross.
Pross said Maps Credit Union has been diligent in creating a culture of risk management and compliance, and that the information it gathers is “meticulously scrutinized.” She said more than 90% of the Suspicious Activity Reports (SARs) the credit union files are related to cannabis businesses. But not every provider is so scrupulous, she said.
“As a pressing word of caution, there are numerous unscrupulous players trying to benefit from the severe shortage of legitimate financial services available to cannabis businesses, and concerns around criminal prosecution are only feeding those predatory players’ flames,” said Pross.
Pross told the committee another risk is that indirect connections to cannabis revenues are“hard, if not impossible, for financial institutions to both identify and avoid. 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.”
She further pressed Congress to act by recognizing the reality is companies such as Walmart and Albertson’s, based in states where cannabis is illegal, have operations in states where cannabis is legal.
“These examples hint at the truth: every time an employee of a cannabis-related business uses his or her paycheck to buy something as benign as groceries, the local Arkansas or Idaho bank or credit union depositing the companies’ profits gained from those sales is directly impacted by the dilemma before this committee today,” said Pross.
‘Explicit’ Clearance Needed
Pross said that 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 Maps and CUNA support “The SAFE Banking Act,” sponsored by Sen. Jeff Merkley as S.1200 in the Senate and Rep. Ed Perlmutter as H.R. 1595 in the House during the current 116th Congress.
“We strongly believe that financial institutions should be permitted to lawfully serve businesses that engage in activities that are authorized under their state laws, even when such activity may be inconsistent with federal law,” said Pross.
Pross’ full testimony can be found here http://www.cutoday.info/THE-gov/.