New York has legalized recreational marijuana, but since these products are still federally illegal, many financial institutions are wary of accepting cannabis business clients.
Senate Majority Leader Andrea Stewart-Cousins says this is something that will most likely have to be addressed at the federal level.
“We’re trying to work within the framework that's existing,” Stewart-Cousins said. “I do believe that it will probably be helpful if the federal government looks at this a different way.”
On Monday, the U.S. House of Representatives passed the SAFE Banking Act 2021, which would allow financial institutions to take on cannabis business clients without fear of sanctions.
This bill has passed the House before, but struggled to make it through the Senate, despite bipartisan support and a growing number of states legalizing marijuana.
Governor Andrew Cuomo, along with 20 other governors, sent a letter to Congress urging members to pass the SAFE Banking Act.
Separately, bankers associations from all 50 states plus Puerto Rico sent a letter to House leadership also voicing support for the Act.
Dr. Kevin Sabet, president of Smart Approaches to Marijuana and who just released his book called the Smokescreen, says it is a mistake to allow Wall Street access to the cannabis market.
“We know how that story ends, we've had huge industries take advantage of us from the opioid issue to alcohol, to tobacco,” Dr. Sabet said. “Why we would want to repeat this with marijuana is beyond me, unless you're someone in the business who wants to make money. So I think this whole push for legalization, from the start, has been about money for a small number of companies that are going to benefit.”
However, the question remains what will happen for retail dispensaries once they are allowed to operate in New York.
Certain cannabis businesses might receive banking services with New York based financial institutions, but many might have to function on a mostly cash-only basis.
Senator James Sanders, who is the chair of the Banks committee, says he believes one solution will be to create public banks, which are not subject to federal laws.
Public banks are controlled and owned by a state, municipality or other public entity, whereas private banks are usually owned by private shareholders.
Senator Sanders currently has a public bank bill which would authorize local municipalities to lend money to public banks and allow for public ownership of stock in them.
Sanders says this could work for cannabis businesses as well.
“Many ideas are going to be floated, but we believe that the idea of a public bank is one that absolutely deserves notice,” Sanders said.
U.S. Senate Majority Leader Chuck Schumer last week said he is in the process of crafting a federal bill that would legalize recreational marijuana. However, Tuesday the White House Press Secretary said President Joe Biden is looking more at just decriminalization, rather than legalization.