November 15, 2023

Warren, Merkley, Warnock, Blumenauer, 16 Lawmakers Push For New Marijuana Banking Guidance for Fairer Access to Financial Services for Legal Marijuana Businesses

Text of Letter (PDF) I Response from Treasury (PDF)

Washington, D.C.  – U.S. Senators Elizabeth Warren (D-Mass.), Jeff Merkley (D-Ore.), Raphael Warnock (D-Ga.) and U.S. Representative Earl Blumenauer (D-Ore.) led 16 lawmakers in a letter to Secretary of the Treasury Janet Yellen and Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki, asking FinCEN to update its out-of-date guidance on marijuana-related businesses to promote fairness in financial services for marijuana businesses operating in states where marijuana is no longer illegal.

Senators Tina Smith (D-Minn.),  Ed Markey (D-Mass.), Ron Wyden (D-Ore.), Bernie Sanders (I-Vt.), Cory Booker (D-N.J.), Peter Welch (D-Vt.), Brian Schatz (D-Hawaii), Amy Klobuchar (D-Minn.), Chris Van Hollen (D-Md.), and John Fetterman (D-Pa.) and Representatives Eleanor Holmes Norton (D-D.C.), Jan Schakowsky (D-Ill.), Barbara Lee (D-Calif.), Becca Balint (D-Vt.), Val Hoyle (D-Ore.), and Katie Porter (D-Calif.) signed the letter. 

“FinCEN’s 2014 guidance predates action by many states to legalize marijuana possession and sales, and it unnecessarily red-flags businesses whose owners have been engaged in marijuana activities that are no longer criminalized at the state level. The updated guidance should clarify that if a marijuana-related act has been expunged, pardoned, is no longer illegal under state law, or is not disqualifying for obtaining a state marijuana license or permit (i.e. ‘state-sanctioned marijuana activity’), then financial institutions should not consider that offense a ‘red flag’ when conducting customer due diligence of marijuana businesses. This would be an important step to promote fairness in the provision of financial services to marijuana businesses that participate in state-sanctioned marijuana activity,” wrote the lawmakers. 

On February 14, 2014, FinCEN issued guidance that directs financial institutions to consider various “red flags” before providing services to marijuana-related businesses, including a red flag that would capture all past marijuana criminal records and involvement in the illegal purchase or sale of marijuana — regardless of whether the marijuana-related act is now state sanctioned. As a result, if a business owner has a conviction for simple marijuana possession, banks can view that conviction as a reason not to provide financial services, like banking services and business loans, even in states where marijuana possession is no longer illegal. 

Under this current guidance, a marijuana business owner with a marijuana conviction may be able to participate in a state licensing program on paper, but in practice may be unable to access a bank loan because they are considered a high-risk customer, and others may be denied bank accounts and left to operate their businesses on a cash-only basis, exposing workers to safety risks. The lawmakers noted that this disproportionately harms Black- and Brown-owned businesses, whose owners are more likely to have a marijuana-related conviction, though they are not more likely to have violated marijuana use laws. 

“FinCEN’s red flags bake a penalty for non-violent marijuana activity into lending decisions — even as states overwhelmingly move to eliminate such penalties… State and local cannabis regulators across the country have raised FinCEN’s red flag policy as a significant issue impacting their efforts to responsibly and fairly license and regulate marijuana businesses. FinCEN should ensure its guidance does not impose barriers to the efforts of states to provide business opportunities to those with previous marijuana offenses,” continued the lawmakers. 

Given these concerns, the lawmakers are asking FinCEN to update its guidance on marijuana-related businesses to ensure all marijuana business owners have fair access to banking services, and they are asking FinCEN to answer a set of questions about its efforts to address this problem by December 4, 2023.

Senator Warren has long fought to reform cannabis policy and provide justice to individuals currently and formerly incarcerated for cannabis-related offenses:

  • In May 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the need for the SAFE Banking Act, which would create a safe harbor from prosecution, asset forfeiture, or other liability for financial institutions that serve cannabis businesses, as a critical step toward helping cannabis businesses access safe banking services and protecting workers from the safety risks of working in cash-only businesses.
  • In December 2022, Senator Warren and Representative Blumenauer led a bipartisan and bicameral group of lawmakers in a letter urging the Biden-Harris Administration to deschedule marijuana. 
  • In July 2022, Senators Warren and Sanders led a letter to President Biden, Attorney General Merrick Garland, and Health and Human Services Secretary Xavier Becerra, following up on previous requests that the administration use its authority to deschedule cannabis and pardon non-violent cannabis-related offenders.
  • In November 2021, Senators Warren, Markey, and Merkley sent a letter to President Biden urging him to use his authority to pardon all individuals convicted of federal non-violent cannabis offenses.
  • In October 2021, Senators Warren and Booker urged Attorney General Merrick Garland to decriminalize cannabis by removing the drug from the Federal controlled substances list.
  • In March 2021, Senators Warren, Merkley, and Steve Daines (R-Mont.) cosponsored the bipartisan Secure and Fair Enforcement (SAFE) Banking Act to ensure that legal cannabis businesses have access to critical banking services.

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