Reed Smith Client Alerts

Last week’s Senate Banking Committee hearing on the lack of federal banking options available to enterprises in the cannabis industry appeared to be a strong call to action. At the July 23 hearing, the ranking Senate members present overwhelmingly supported protecting financial institutions by agreeing to pursue legislation that would allow them to take deposits from and provide other banking services to such entities. One senator remarked that at a time when there are so few issues on which both sides of the aisle can agree, this is one area that both Democrats and Republicans concur requires prompt attention and change.

On July 23, 2019, the Senate Banking Committee heard testimony from both politicians and industry spokespersons about the dire need for traditional banking services in the cannabis industry.  Amazingly, both Democrats and Republicans appeared to agree that the current situation is untenable.

Currently, cannabis businesses operating legally within their respective states do not have access to most banks and often operate on an all-cash basis. This situation has been shown to increase criminal activity and tax evasion, and harms not only the businesses themselves but also their employees and vendors.