As feds rework marijuana policy, Murkowski and Sullivan oppose rollbacks to banking rules

Update: Alaska Sen. Dan Sullivan also signed the final version of the letter that was sent to the banking regulators, though he was omitted from last week’s press release. It’s a significant development on the letter, showing the scrappy Alaska delegation continues to be united on protecting Alaska’s marijuana laws against federal meddling. The original story has been updated.

You might have missed it in the run up to the weekend’s government shutdown (we did), but last week Alaska’s U.S. Sens. Lisa Murkowski and Dan Sullivan joined a dozen Democrats in calling on a federal banking agency to preserve rules that allowed limited banking for marijuana businesses.

The letter comes after U.S. Attorney General Jeff Sessions rescinded the Obama-era Cole Memo, which largely left states that legalized marijuana alone, earlier this year. The impact of Sessions’ action is unclear, including what would happen to the 2014 guidance from the federal Financial Crimes Enforcement Network (FinCEN) that allowed limited banking for marijuana businesses as long as it aligned with the Cole Memo, which refocused federal resources on illegal trafficking of drugs and sales of drugs to minors.

“FinCEN’s stated priorities have allowed such businesses to conduct commerce more safely through financial institutions which reduces the use of all cash, improves public safety, and reduces fraud,” explained a letter penned by Murkowski and Oregon Sen. Jeff Merkley. “Leaving your guidance unchanged will continue to encourage small companies to make investments by freeing up access to capital. It will also further provide for well regulation and oversight through suspicious activity reports.”

FinCEN’s guidance requires banks to report suspicious activity if they bank with marijuana-related businesses. As of March 31, 2017 there were 368 banks that were working in some form or another with marijuana businesses. They reported a grand total of 28,651 suspicious activity reports to FinCEN since issuing the guidelines.

(Source: Financial Crimes Enforcement Network)

The letter also argues that forcing marijuana businesses back to a cash-only system poses pretty substantial risks. It’s a similar argument that’s been given both for legalizing marijuana and against criminalizing it again.

“Rescinding this guidance would inject uncertainty in the financial markets. Attempts to disrupt this market are dangerous and imprudent. We see the removal of protections on financial institutions, which are operating in accordance with state laws, as a poor alternative to creating meaningful policy though the political process,” explained the letter. “This guidance must remain intact because the risks involved in removing it are too great.”

In addition to Murkowski, Sullivan and Merkley, other legislators that signed onto the letter include: Sens. Brian Schatz (D-HI), Rand Paul (R-KY), Kirsten Gillibrand (D-NY), Elizabeth Warren (D-MA), Michael Bennet (D-CO), Catherine Cortez Masto (D-NV), Ron Wyden (D-OR), Patty Murray (D-WA), Bernie Sanders (I-VT), Cory Booker (D-NJ), Maria Cantwell (D-WA) and Edward J. Markey (D-MA).

Why it matters

Though Murkowksi and Sullivan opposed the legalization of commercial marijuana, they’ve been consistent defenders of the state’s marijuana laws. In addition to this letter, Murkowski has signed onto legislation that would formally require the feds to defer to state laws on marijuana. Also notable is that Murkowski and Sullivan are two of just three Republicans (the other being Sen. Rand Paul) to sign onto the banking letter.

Also interesting is the accompanying news release’s characterization of Sessions’ decision to rescind the memo as an “attack” on “states’ rights to set their own cannabis laws” that “throws into chaos years of work to create a safer, more stable market,and threatens to drive cannabis sales back underground into the dangerous black market.”

Alaska Attorney General Jahna Lindemuth has also joined a coalition of attorneys general in calling for Congress to expressly allow banks to work with marijuana businesses, which would go further than the FinCEN’s 2014 guidance.

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The press release and letter

BIPARTISAN GROUP OF SENATORS URGES FINCEN TO STAY THE COURSE ON CANNABIS BANKING

Forcing businesses to operate in all-cash increases risk of crime, threatens public safety

Thursday, January 18, 2018

WASHINGTON, D.C. – A bipartisan group of Senators, led by Sen. Jeff Merkley (D-OR) and Sen. Lisa Murkowski (R-AK), today urged the Financial Crimes Enforcement Network (FinCEN) to keep in place guidance that has enabled some financial institutions to provide banking services for legitimate cannabis businesses in states that have legalized medical or recreational cannabis.

In addition to Merkley and Murkowski, today’s letter to FinCEN Director Kenneth Blanco was signed by Sens. Brian Schatz (D-HI), Rand Paul (R-KY), Kirsten Gillibrand (D-NY), Elizabeth Warren (D-MA), Michael Bennet (D-CO), Catherine Cortez Masto (D-NV), Ron Wyden (D-OR), Patty Murray (D-WA), Bernie Sanders (I-VT), Cory Booker (D-NJ), Maria Cantwell (D-WA), Edward J. Markey (D-MA) and Kamala Harris (D-CA).

“We urge FinCEN to preserve this guidance to continue to support banking infrastructure and access to financial institutions for businesses that are operating in accordance with state and local law and abiding by 8 other stated factors in your guidance,” the Senators wrote. “FinCEN’s stated priorities have allowed such businesses to conduct commerce more safely through financial institutions which reduces the use of all cash, improves public safety, and reduces fraud…. This guidance must remain intact because the risks involved in removing it are too great.”

The Senators’ letter follows Attorney General Jeff Sessions’ attack earlier this month on states’ rights to set their own cannabis laws. The Sessions decision throws into chaos years of work to create a safer, more stable market, and threatens to drive cannabis sales back underground into the dangerous black market.

Merkley is the lead Senate sponsor of the Secure and Fair Enforcement (SAFE) Banking Act, legislation that would ensure legal cannabis businesses can access banking services.

The full text of the letter follows below.

###

January 18, 2018

The Honorable Kenneth A. Blanco

Director

Financial Crimes Enforcement Network

U.S. Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

Director Blanco,

We are writing to express our continuing support for the Financial Crimes Enforcement Network (FinCEN) guidance from 2014 on the Bank Secrecy Act (BSA) Expectations Regarding Marijuana-Related Businesses. This guidance was developed and issued in conjunction with the Department of Justice and has provided much needed stability to a growing market.

We urge FinCEN to preserve this guidance to continue to support banking infrastructure and access to financial institutions for businesses that are operating in accordance with state and local law and abiding by 8 other stated factors in your guidance. FinCEN’s stated priorities have allowed such businesses to conduct commerce more safely through financial institutions which reduces the use of all cash, improves public safety, and reduces fraud. Leaving your guidance unchanged will continue to encourage small companies to make investments by freeing up access to capital. It will also further provide for well regulation and oversight through suspicious activity reports.

Rescinding this guidance would inject uncertainty in the financial markets. Attempts to disrupt this market are dangerous and imprudent. We see the removal of protections on financial institutions, which are operating in accordance with state laws, as a poor alternative to creating meaningful policy though the political process. This guidance must remain intact because the risks involved in removing it are too great.

We believe any move to eliminate revoke or change the 2014 guidance is unwise. We ask you stay the current course, a proven method that both encourages safe commerce and discourages illegitimate markets.

Sincerely,

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