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SUPPORTING H.R. 1996
______
HON. WARREN DAVIDSON
of ohio
in the house of representatives
Wednesday, April 28, 2021
Mr. DAVIDSON. Madam Speaker, I include in the Record the following letters of endorsement for H.R. 1996, the SAFE Banking Act of 2021.
Law Enforcement
Action Partnership,
Medford, MA, March 17, 2021.RE SAFE Banking Act--Position: Support.
Hon. Ed Perlmutter,Member of Congress,Washington, DC.Hon. Nydia M. Velazquez,Member of CongressWashington, DC.Hon. Steve Stivers,Member of Congress,Washington, DC.Hon. Warren Davidson,Member of Congress,Washington, DC.
Dear Representatives Perlmutter, Velazquez, Stivers, and Davidson: Thank you for the opportunity to once again participate in this historic discussion of the SAFE Banking Act. LEAP's previous executive director, Major Neill Franklin (Ret.), was honored to have testified in the subcommittee hearing in 2019 and we would like to affirm our ongoing support of this important bill.
I spent 21 years in law enforcement, and upon leaving, I continued to serve the public. My mission has always been, and will always be, to promote safety and justice. As the executive director of the Law Enforcement Action Partnership (LEAP), a nonpartisan, nonprofit of police prosecutors, judges and other criminal justice professionals, I've helped ensure our mission is to mobilize the voice of law enforcement in support of policies that will make us all safer.
At a time when more than a dozen states have voted to regulate and control marijuana, and dozens more have implemented programs for medical marijuana, it is beyond time for the federal government to update the banking system to support these democratic choices.
When my predecessor testified in 2019, he told the story of a dispensary owner from Orange County, California, who was kidnapped, tortured, permanently mutilated, and left for dead. By the grace of God, he survived this despicable act of violence, but the conditions under which marijuana industry workers risk similar victimization persist.
The conditions persist because one of the fastest growing markets in the country has nowhere to legally put its money. When thieves know a business is operating in cash, it becomes a fairly simple matter to target the owners and employees. Suddenly, something as mundane as making a tax payment becomes a potentially lethal situation.
This lack of regulatory framework is precisely why voters have made the drug legal in some parts of the country. Underground markets enrich criminals at the expense of everyone's safety. We cannot simply acknowledge marijuana is now legal in some states or look the other way while it happens; we have to build a model for how to keep people safe while voters decide to move the industry above-ground.
Police agencies can access financial records more easily when the transactions are documented in secure banking records. Banks can assist with investigations by flagging suspicious activity and alerting authorities to businesses that may be involved in organized crime. Financial records are used to locate people, estimate the size of an organization, and build cases against hardened criminals. A well-known example is Al Capone, who, after a lifetime of notoriety, was finally arrested for tax-evasion. When marijuana businesses have to work with cash, banks have limited ability to flag suspicious activity--and otherwise legal businesses are more likely to be overrun by cartels in the absence of a paper trail.
I'm not one for fear mongering--what I testify to is rooted in experience and research. Any police officer who has worked the street or investigated enough robberies will testify to the same regarding any business forced to handle large amounts of cash.
The SAFE Banking Act presents us with an opportunity to help stabilize the marijuana industry and enhance public safety. I believe it is my responsibility as a lifelong public servant to stay involved in this legislation to the very end.
Thank you for your time and for bringing the SAFE Banking Act to a vote.
Respectfully,
Lieutenant Diane
Goldstein (Ret.),
Executive Director,Law Enforcement Action Partnership (LEAP).
____
Mountain West
Credit Union Association,
Denver, CO, March 18, 2021.Congressman Ed Perlmutter.Washington, DC.
Dear Congressman Perlmutter: I write to you today in support of the Secure and Fair Enforcement (SAFE) Banking Act of 2021. This legislation provides important protections for our credit unions that wish to provide financial services to legal entities in their states.
As financial services providers serving nearly 4 million members in Arizona, Colorado and Wyoming, credit unions play a central role in our communities by fulfilling banking needs that may not be otherwise available. Currently, however, we cannot serve an industry that generates several billion dollars in sales and tax revenues--the recreational cannabis industry--without substantial risk due to ongoing uncertainty over federal enforcement of the Controlled Substances Act. This has become not only a states' rights issue, but an important public safety issue. Without access to standard banking services, some of these companies have had to come up with alternative solutions. Many are unable to undertake the most basic functions of successful businesses, such as paying vendors, employees, and taxes, but instead have large amounts of money unsecured, unaccountable and at risk for abuse.
The SAFE Banking Act would provide the safe harbor we need as financial services providers to service this growing industry and protect our members and the taxpayers of our states. This is a matter independent of the question of legalization of cannabis and is about ensuring that legal businesses have the basic financial services they need for compliance and accountability.
Thank for your leadership on this issue. We hope Congress will take swift action to address this matter and pass the SAFE Banking Act without delay.
Sincerely,
Scott Earl,
President/CEO,Mountain West Credit Union Association.
____
National Association of Federally-Insured Credit Unions,
Arlington, VA, April 19, 2021.Re H.R. 1996, the SAFE Banking Act of 2021.
Hon. Nancy Pelosi,Speaker, House of Representatives,Washington, DC.Hon. Kevin McCarthy,Minority Leader, House of Representatives,Washington, DC.
Dear Speaker Pelosi and Leader McCarthy: I write to you today on behalf of the National Association of Federally-Insured Credit Unions (NAFCU) in conjunction with the House's scheduled vote on H.R. 1996, the SAFE Banking Act of 2021, to urge the House to support this legislation. NAFCU advocates for all federally-insured not-for-profit credit unions that, in turn, serve over 124 million consumers with personal and small business financial service products.
As you are aware, the vast majority of states have authorized varying degrees of marijuana use, ranging from limited medical use to decriminalization and recreational use at the state-level. NAFCU has heard from a number of our member credit unions in these states that they are being approached by their members, or potential members, that have a small business in or are serving the legal cannabis industry in their state and are seeking banking services for their small business.
As the cultivation, sale, distribution, and possession of marijuana remains illegal at the federal level under Schedule I of the Controlled Substances Act, the majority of credit unions remain hesitant to provide financial services to these members and their small businesses. While the 2013 memo from U.S. Deputy Attorney General James M. Cole (``Cole Memo'') and the 2014 guidance from FinCEN have attempted to provide clarity to financial institutions, uncertainty remains for financial institutions in this area. Guidance can be rescinded at any time and in fact, former Attorney General Jeff Sessions took action in 2018 to essentially rescind the
``Cole Memo.'' For financial institutions, such as credit unions, there are additional regulatory challenges that compound the uncertainty of providing financial services to state-authorized marijuana-related businesses (MRBs). These go beyond just concerns about criminal or civil penalties, but also extend to requirements related to proper Suspicious Activity Report (SAR) and anti-money laundering (AML) filings as required under the Bank Secrecy Act, access to federal deposit insurance and a Federal Reserve master account, and even potential issues with the Internal Revenue Service
(IRS). Missteps in these areas could prove devastating to an institution. It should be noted that these risks also exist when providing financial services to ancillary businesses that provide products and services to MRBs and fall within the credit union's field of membership, even if the state-authorized MRB does not
NAFCU does not have, and is not taking, a position on the broader question of the legalization or decriminalization of marijuana at any degree at the federal or state level. However, we do support Congress taking the steps found in H.R. 1996 to provide greater clarity and legal certainty at the federal level for credit unions that choose to provide financial services to state-authorized MRBs and ancillary businesses that may serve those businesses in states where such activity is legal. While H.R. 1996 does not address every issue on this front, it seeks to provide a safe harbor for financial institutions that wish to serve such businesses and would be an important step towards improving clarity and addressing what is often perceived as misalignment between federal and state laws. It is with this in mind that NAFCU urges you to support the SAFE Banking Act of 2021 when it comes before the House.
Thank you for your attention to this important issue. We look forward to continuing to work with you on this and other issues of importance to credit unions. Should you have any questions or require any additional information, please do not hesitate to contact me or Sarah Jacobs, NAFCU's Associate Director of Legislative Affairs.
Sincerely,
Brad Thaler,Vice President of Legislative Affairs.
____
National Association of
State Treasurers,
Washington, DC, April 14, 2021.Hon. Sherrod Brown,Chair, Committee on Banking,U.S. Senate, Washington, DC.Hon. Maxine Waters,Chair, Committee on Financial Services,House of Representatives, Washington, DC.Hon. Pat Toomey,Ranking Member, Committee on Banking,U.S. Senate, Washington, DC.Hon. Patrick McHenry,Ranking Member, Committee on Financial Services, House of
Representatives, Washington, DC.
Dear Senator Brown, Senator Toomey, Representative Waters and Representative McHenry: On behalf of the nation's State Treasurers, I wanted to thank you for your leadership on critical state finance issues and to express our support for the Secure and Fair Enforcement (SAFE) Banking Act of 2021
(H.R. 1996). While we do not take any formal position on efforts to expand the legality of cannabis--medical or recreational--our association remains concerned by the ancillary effects posed by legitimate participants in the industry lacking reliable access to the federally regulated banking system.
By July of this year, 15 states and the District of Columbia will have legalized adult use cannabis, and 36 states will have legalized access to medical cannabis. Nonetheless, conflicts between federal banking laws and state cannabis laws create unsafe conditions where many cannabis related businesses rely on cash-only business models, despite otherwise fully complying with their state's health and safety rules. Unbanked cannabis businesses are frequently unable to write checks, make and receive electronic payments, utilize payroll providers, accept debit or credit cards, or pay taxes through a financial institution. The condition makes tax collection more difficult and burdensome for both businesses and governments, and substantially increases the likelihood of tax fraud. The inability to access banking services not only directly impacts cannabis businesses, but also the secondary service providers in our states who do business with them.
The National Association of State Treasurers continues to support commonsense federal laws and regulations to provide essential banking services to legitimate cannabis businesses, promote public safety and financial transparency, and facilitate tax and fee collection without compromising federal enforcement of anti-money laundering laws against criminal enterprises. To that extent, we fully support the key elements of the SAFE Banking Act that comport with our association's policy as outlined in this letter and that is contained in our policy resolution (see attachment). We also thank Rep. Perlmutter, Rep. Stivers, Sen. Merkley, Sen. Daines and all of their colleagues for leading on this issue.
I have asked our policy director, Brian Egan, to follow up with your offices should you have any questions, comments or concerns. Please consider our members and professional staff as resources to you and your teams.
Thank you again for your consideration on this matter.
Sincerely,
Shaun Snyder,
Executive Director,National Association of State Treasurers (NAST).
____
National Association of Realtors,
Washington, DC, March 18, 2021.Hon. Ed Perlmutter,House of Representatives,Washington, DC.Hon. Nydia M. Velazquez,House of Representatives,Washington, DC.Hon. Steve Stivers,House of Representatives,Washington, DC.Hon. Warren Davidson,House of Representatives,Washington, DC.
Dear Representatives Perlmutter, Stivers, Velazquez, and Davidson: On behalf of the 1.4 million members of the National Association of REALTORS (NAR) and its affiliate, the Institute of Real. Estate Management (IREM), thank you for introducing the ``Secure and Fair Enforcement (SAFE) Banking Act of 2021.'' This bipartisan bill provides a clear framework for cannabis businesses to access financial services. As more states legalize cannabis use, the industry continues to rapidly grow, with more than $10 billion in sales and $1 billion in state tax revenue already recorded. However, the barriers keeping these state-legal businesses from accessing federally-insured banks can impede their ability to grow while raising safety issues in their communities.
Thirty-six states have legalized cannabis for medical or recreational use, a number that is expected to continue to go up in the coming years. Despite this, current federal law prevents federally-insured banks from working with cannabis businesses, as well as ancillary businesses that provide them with goods and services--including real estate professionals who have cannabis business owners as their clients. As a result, those states are struggling to address significant challenges to public safety and the regulatory compliance issues that arise with cash-only businesses.
The SAFE Banking Act takes an important step toward enabling financial services for legitimate cannabis-related businesses by specifying that their proceeds will not be considered unlawful under federal money laundering laws, thus allowing these businesses access to federally-insured banking institutions. Further, it directs the Financial Crimes Enforcement Network (FinCEN) and federal banking regulators to issue guidance and exam procedures for banks working with cannabis businesses. As the legal state-cannabis industry grows, the connections to other types of industries--including real estate--will grow as well.
State-legal cannabis businesses require real estate--farmland, warehouses, and storefronts--creating multiple contacts to other industries and businesses, each of which is affected by current laws keeping their money out of the bank system. The SAFE Banking Act provides clarity for business owners, banks, and regulators in the cannabis industry while promoting safety and ensuring further growth to the U.S. economy.
REALTORS thank you for your diligent work to help provide access and clarity to legitimate businesses in those states that have legalized cannabis, which in turn will boost economic growth in real estate and other industries around the country.
Sincerely,
Charlie Oppler,
2021 President,National Association of REALTORS.
____________________
SOURCE: Congressional Record Vol. 167, No. 73
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