It’s time Congress fixed cannabis’ green problem

Last month, Illinois became the 11th state to legalize the recreational use of cannabis. Across the country, 33 states and the District of Columbia have legalized cannabis medically or recreationally, creating an $8.6 billion a year industry that is being conducted almost entirely in cash.

For a dispensary, that cash piles up. In one month, a single dispensary can take in $4 million and there’s extremely limited options to safely bank the funds. Currently, the Justice Department considers handling money earned by legal cannabis businesses tantamount to money laundering, discouraging credit unions and banks from serving these state-legalized businesses. 

Millions in cash is being stored in back rooms and storehouses around the country, creating a massive target for thieves. A study out of the Wharton Business School found that a typical dispensary burglar can steal up to $50,000. To put that into perspective, the average bank robber nets $7,500.

With more states legalizing cannabis in one form or another, and with the industry slated to triple by 2023, this is a rapidly growing public safety issue. But that’s not to say it can’t be fixed. Without even approaching the third rail of nationwide legalization, Congress can provide a means for financial institutions in those 33 states to easily and legally get cash off the street. Beyond reducing street crime associated with break-ins and robberies, those same financial institutions would be able to provide additional checks on that money, monitoring the businesses for criminal financial activity.

Fewer than 700 credit unions and banks are working closely with the government to serve these legal businesses as best as they currently can. Operating under guidance from the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), these financial institutions continuously report on the financial activity of legal cannabis businesses, flagging actions that could indicate a business is engaged in illegal conduct such as selling across state lines, money laundering, or distributing on the black market.

Nearly 20,000 times over the past five years, financial institutions have sought to curtail criminal enterprises, prioritizing community safety. But with fewer than 700 credit unions and banks across the country doing this important work, it’s just a drop in the bucket. Imagine what could be achieved if Congress allowed every financial service provider in those 33 states to get the cash off the street and manage the finances of these legal businesses, providing that vital oversight.

Already this year, 38 attorneys general called on Congress to provide a commonsense fix to this growing problem. So, too, did 20 governors of both parties. Leaders from multiple financial trades have done the same.

With the industry rapidly growing, and with more states legalizing cannabis in some form, Congress must act now to get cash off our streets, reduce money laundering and black-market sales, and protect communities from Maine to Hawaii.

Rachel Pross is Chief Risk Officer at Maps Credit Union in Oregon. In February 2019, Ms. Pross testified before the Congress, advocating for a cannabis banking solution.