PRESS RELEASE


FOR IMMEDIATE RELEASE
July 15, 2015

CONTACT: Patrick Keefe, NASCUS Communications/(703) 528-5974; pkeefe@nascus.org

MARIJUANA BUSINESS BANKING ACCESS BILL IN SENATE
BACKED BY STATE REGULATORS OF CREDIT UNIONS

‘Important first step’ to ending state of ‘limbo’ for regulators, credit unions;
States’ rights, clarity and security for credit unions are key issues

State regulators of credit unions support U.S. Senate legislation giving marijuana businesses access to the national banking system, calling the bill an “important first step in curing the ambiguity around serving these businesses and their affiliates.”

In a letter to the Senate bill’s sponsors (and to the sponsor of similar legislation in the House) the National Association of State Credit Union Supervisors (NASCUS) wrote that, under current federal law, the production, sale, or possession of marijuana remains illegal. “As a result, state regulators and the financial institutions that they supervise are in limbo: caught between the uncertainty of federal enforcement action and the state mandate to serve the financial needs of the local community,” stated the letter, signed by NASCUS President and CEO Lucy Ito.

“This legislation represents an important first step in curing the ambiguity around serving these businesses and their affiliates,” the letter states.

The regulators were writing about the Marijuana Businesses Access to Banking Act of 2015 (S.1726), sponsored by Sens. Cory Gardner (R-Colo.) and Jeff Merkley (D-Oregon). The NASCUS letter is also addressed to and Rep. Ed Perlmutter (D-Colo.), who with Rep. Denny Heck (D-Wash.), sponsored similar legislation in the U.S. House (H.R. 2076).

NASCUS is the professional association of the 46 state credit union regulatory agencies that charter and supervise the nation’s state-chartered credit unions.

Separately, Ito pointed out that the issues for the regulators are those of states’ rights, and clarity and security for the financial institutions that they supervise.

The letter points out that the Financial Crimes Enforcement Network (FinCEN, a bureau of the U.S. Treasury) reports more than 100 financial institutions are already serving a marijuana business. “As this industry continues to grow, more financial institutions may be willing to assume the risks associated with serving” the businesses, the letter states. “However, the fact remains that these institutions are operating in an ambiguous regulatory and legal environment. Current guidance from the Department of Justice and FinCEN, while helpful, leaves financial institutions exposed to the risk of significant criminal, civil, and administrative action. If left unresolved, the uncertain status of marijuana businesses under federal law could translate to real losses for community financial institutions.”

The NASCUS letter asserts that credit unions and other financial institutions should be able to serve these legal businesses, provided the financial institutions have robust Bank Secrecy Act and anti-money laundering (AML) programs and the appropriate internal controls to manage the activity in a safe and sound manner. The Marijuana Businesses Access to Banking Act, the NASCUS letter notes, would help resolve the fundamental questions of liability under federal law, and would allow state and federal regulators to focus on setting clear regulatory expectations around these accounts.

”Resolving this conflict of law will make the communities where this activity has been legalized and the financial institutions serving those communities safer,” the NASCUS letter states. “It will allow businesses operating in accordance with state law to serve customers, pay taxes, and minimize the risk of attracting violent crime.  It will bring non-law abiding businesses under the direct and thorough scrutiny of state and federal supervisory authorities.  Finally, it will enable financial institutions to pursue business and development plans with a clear understanding of regulatory expectations.”

The complete text of the NASCUS letter follows:

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July 15, 2015
The Honorable Jeff Merkley
United States Senate
Washington, D.C. 20510

The Honorable Ed Perlmutter
U.S. House of Representatives
Washington, D.C. 20515

Re: NASCUS Support for the Marijuana Businesses Access to Banking Act of 2015

Dear Senator Merkley and Representative Perlmutter:

On behalf of the National Association of State Credit Union Supervisors (NASCUS), the professional association of the 46 state credit union regulatory agencies that charter and supervise the nation’s state-chartered credit unions, I am writing in support of your efforts to secure financial services for legal state marijuana businesses through the Marijuana Businesses Access to Banking Act of 2015 (H.R. 2076/ S.1726). This legislation represents an important first step in curing the ambiguity around serving these businesses and their affiliates.

Right now, twenty-three states and the District of Columbia have legalized marijuana use in some form. The state regulated cannabis industry is already valued at over $2.5 billion, and 17 states are expected to have some type of legalization initiative on the ballot in 2016. Nevertheless, the production, sale, or possession of marijuana remains illegal under Federal law. As a result, state regulators and the financial institutions that they supervise are in limbo: caught between the uncertainty of federal enforcement action and the state mandate to serve the financial needs of the local community.

Resolving this conflict of law will make the communities where this activity has been legalized and the financial institutions serving those communities safer. It will allow businesses operating in accordance with state law to serve customers, pay taxes, and minimize the risk of attracting violent crime. It will bring non-law abiding businesses under the direct and thorough scrutiny of state and federal supervisory authorities. Finally, it will enable financial institutions to pursue business and development plans with a clear understanding of regulatory expectations.

According to FinCEN, over 100 financial institutions are already serving a marijuana business, and as this industry continues to grow, more financial institutions may be willing to assume the risks associated with serving this industry. However, the fact remains that these institutions are operating in an ambiguous regulatory and legal environment. Current guidance from the Department of Justice and FinCEN, while helpful, leaves financial institutions exposed to the risk of significant criminal, civil, and administrative action. If left unresolved, the uncertain status of marijuana businesses under Federal law could translate to real losses for community financial institutions, not to mention the ongoing threat of violent robberies in local communities where legal marijuana businesses are forced to operate with dangerously large amounts of cash.

Financial institutions should be able to serve these legal businesses, provided they have a robust Bank Secrecy Act and anti-money laundering (AML) program and the appropriate internal controls to manage the activity in a safe and sound manner. The Marijuana Businesses Access to Banking Act would help resolve the fundamental questions of liability under Federal law, and would allow state and federal regulators to focus on setting clear regulatory expectations around these accounts.

On behalf of the nation’s state credit union supervisors and the state-chartered credit unions they regulate, we appreciate all of your hard work on this legislation. You have demonstrated leadership on an important issue that needs resolution. If NASCUS can be of any assistance, please don’t hesitate to reach out to me directly, or to our Regulatory and Public Policy Counsel, Sabrina Bergen, at (703) 528-0669.

Sincerely,

Lucy Ito
President & CEO
Natl. Assn. of State Credit Union Supervisors (NASCUS)
Arlington, VA

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The National Association of State Credit Union Supervisors (NASCUS) is the primary resource and voice of the state governmental agencies that charter, regulate and examine the nation’s state-chartered credit unions. NASCUS membership is made up of state-chartered credit unions, state regulators and other supporters of the state credit union system. NASCUS is the only organization dedicated to the defense and promotion of the state credit union charter and the autonomy of state credit union regulatory agencies.

 

Information Contact:
Patrick Keefe, Director of Communications, pkeefe@nascus.org or (703) 528-5974

The National Association of State Credit Union Supervisors (NASCUS) is the primary resource and voice of the state governmental agencies that charter, regulate and examine the nation’s state-chartered credit unions. NASCUS membership is made up of state-chartered credit unions, state regulators and other supporters of the state credit union system. NASCUS is the only organization dedicated to the defense and promotion of the state credit union charter and the autonomy of state credit union regulatory agencies.