|In the near future, I will introduce legislation which establishes the Cannabis Banking Commission (CBC) as part of the Department of Banking & Securities for the purpose of working to improve access to banking for legal cannabis businesses in Pennsylvania.
In 2016, cannabis was legalized in Pennsylvania for medical purposes. However, the fact that cannabis remains a Schedule One drug at the federal level has forced many legal cannabis related businesses to forgo banking banking services provided by traditional banking institutions and operate only with cash. The federal government could, if desired, prosecute anyone involved in the cannabis industry under federal laws, including banking institutions.
Without access to banking services, the cannabis industry is forced to pay bills, employees, suppliers, and taxes in cash. Some of the biggest risks associated with maintaining a cash business concern public safety. Large amounts of cash make cannabis businesses, their employees, and their costumer targets for violent crimes. The cannabis industry is forced to spend a significant amount of time and resources on cash management such as hiring security personnel and securing cash in vaults in undisclosed locations.
If financial institutions risk federal punishment for doing business with the cannabis industry, banking institutions will not provide services. California conducted a Feasibility Study (see attachment) that examined potential solutions to the banking problem such as a public credit union, the state purchase of an existing private bank and various financial technology solutions. Each of these options is ultimately dependent on access to national banking and payment processing networks, so each encounters the same difficulties overcoming the federal laws that are holding back access to banking.
This legislation seeks to adopt a recommendation of the California study by creating a working group called the Cannabis Banking Commission (CBC) whose primary responsibility will be to improve access to banking for the cannabis industry in Pennsylvania. The CBC will support the normalization of cannabis-related banking through some combination of lobbying for legal and regulatory reform. Its fundamental purpose is to centralize cannabis banking expertise.
The CBC will be housed in the Department of Banking and Securities and will be made up of the following appointees:
The CBC shall have the responsibility of:
- The Secretary of the Department of Banking and Securities; who will serve as chair of the commission
- The Secretary of the Department of Revenue
- The Secretary of the Department of Agriculture
- The Secretary of the Department of Health
- 2 appointees from each legislative caucus
- 2 appointees who are principals, operators, financial backers or employees of the cannabis industry appointed by Governor
- 3 appointees from the banking industry appointed by Governor
- Individuals who are knowledgeable and experienced in providing financial services through
- a financial institution
- a credit union
- technology to facilitate end-to-end payment via the internet
Additionally, the CBC will be responsible for generating a report that includes the recommendations and findings of:
- Examining and analyzing the statutory and regulatory law and issues relating to the provisions of financial services by financial institutions to cannabis organizations and other businesses in the cannabis industry;
- Examining and analyzing the law, issues and potential solutions in other states and the nation with respect to the provision of financial services by financial institutions to businesses in the cannabis industry;
- Accepting and reviewing written comments from individuals and organizations;
- Providing resources regarding the current state of law for financial institutions considering whether to provide financial services to cannabis organizations and other businesses in the cannabis industry on a publicly-accessible internet website.
- Developing and implementing short-term and long-term strategies as necessary to encourage existing financial institutions to provide financial services to cannabis organizations and other businesses in the cannabis industry through:
- Education within the financial and cannabis industry
- Cross-department data aggregation and sharing
- Advocacy for legal and regulatory reform at both the state and federal levels
- Coordination of stakeholders within the financial industry, cannabis industry, and state and federal government for purposes of sharing information and facilitating education and advocacy for federal policy changes
Please join me in sponsoring this important legislation. If you have any questions, contact my Policy Director, Micah Mahjoubian, at email@example.com.
- Potential short-term, immediate solutions to improve the ability of the Commonwealth to manage cannabis-related cash payments
- Proposed changes to statutory or regulatory law and policy that would allow and encourage existing financial institutions to provide financial services to cannabis organizations and other businesses in the cannabis industry
- Strategies to encourage existing financial institutions to provide banking services to cannabis organization and other businesses in the cannabis industry.