Financial firms, fertilizer, beverage, and other mainstream companies are calling on Congress to enable pot companies to have access to banks.
According to a report in The Wall Street Journal, with lawmakers gearing up to mull legislation that would enable pot companies to be part of the financial system, groups are lobbying Congress to back it. Later this week a House panel will vote on a law that would enable banks to process marijuana transactions for business in states in which it’s legal. The rule would apply to banks and companies that transact with the pot companies and include landlords, insurers, and others that do business regularly, reported The Wall Street Journal.
The paper pointed to Scotts Miracle-Gro and Constellation Brands as two examples of companies that want the legislation to get enacted. In an interview with the WSJ Jim King, senior vice president of corporate affairs at Scotts, said it hasn’t sold any of its hydroponics equipment in the U.S. and that it can’t sell directly to U.S. pot companies. “If we tried to do that today, our banks would tell us, ‘No that’s crossing a line that we’re not comfortable with,” King said.
While states are increasingly legalizing pot for both medical and recreational use, it’s still illegal at the federal level, which prevents banks from working with the companies. Pot companies can’t take credit cards for processing, which means many of the businesses are cash-based. Because of the cash involved, many pot companies have to spend thousands of dollars to hire private security. Fear that a bank would lose its federal charter if it works with a pot company has forced them on the sidelines. The bill coming to a vote in the House was drafted by Rep. Ed Perlmutter, a Democrat from Colorado, and would prevent federal regulators from pulling a bank’s charter or deposit insurance because it works with a pot company in a state where it’s legal.
The paper noted that even if the legislation passes, it’s not a guarantee that the big banks in the U.S. will begin to lend to pot companies. For one thing, it could be tough to ensure money only stays in the states where marijuana is legal as well — as meet the compliance rules over anti-money laundering. In order for the big banks to get involved, the WSJ said, the law would need to be applied to every state, not just the ones in which it’s legal.