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Utah's AG, Treasurer back credit card and bank transactions for marijuana purchases

Photos: One of Utah’s first medical cannabis grow facilities opens in Tooele
Posted at 9:49 AM, May 22, 2020
and last updated 2020-05-22 11:59:04-04

SALT LAKE CITY — Utah Attorney General Sean Reyes and Treasurer David Damschen are calling on Congress to pass a bill that allows marijuana-related businesses to access the banking system.

In a letter signed by 34 state attorneys general, Reyes urged support of the Secure and Fair Enforcement Banking Act. In a statement to FOX 13, Reyes said it would help Utah's newly up-and-running medical cannabis dispensaries.

"Utah worked hard to find a sensible, humane and balanced approach to medical marijuana policy. But current federal law prevents access to insured financial institutions for businesses in this industry. That creates significant practical and public safety issues for both the general public and for Utah businesses legally operating in the medical cannabis space," he said.

The idea also has support of the Utah Banking Association.

"The inability of insured financial institutions to handle cannabis-related transactions has forced businesses and governments throughout the U.S. to resort to cash to settle transactions. This represents an enormous public safety issue, increasing risk of violent crime, fraud, and theft. Providing regulated and insured financial services to cannabis businesses allows law enforcement, and specifically the Financial Crimes Enforcement Network (FinCEN) within the U.S. Department of Treasury, the transparency needed to distinguish legal cannabis businesses from illegal activity," Damschen said in a statement.

Under federal law, banks and other financial institutions are prohibited from providing services to marijuana-related businesses. That's led to "cash only" transactions at dispensaries. The SAFE Banking Act would allow them to direct deposit and use credit cards. The bill has bipartisan support and the letter signed by AG Reyes was also bipartisan.

As an aside, the letter pointed to the problems with cash-based cannabis transactions during the COVID-19 pandemic.

"The COVID-19 pandemic has sharply focused the need for legislative relief in three key respects. First, threats to public safety caused by a cash-intensive business model, often the target of criminal activity, have intensified in the months since the pandemic began. Next, the presence of large cash transactions places law enforcement, tax regulators, consumers, and patients at heightened risk of exposure to the virus. Finally, the ability to efficiently collect tax revenue from the marijuana industry, estimated to have generated $15 billion in sales in 2019, will provide critical relief for state and local governments predicting budget shortfalls due to the pandemic," the letter states.

Utah voters approved medical cannabis in 2018 and the state implemented a more rigid control system shortly afterward. Several dispensaries have now opened in the state.

The letter was also signed by Nevada Attorney General Aaron Ford. Nevada voters approved recreational cannabis sales in 2016.