Separately, lawmakers are promoting the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, which gives each state the right to determine its own approach to cannabis legislation. That bill is backed by Elizabeth Warren and Cory Gardner, both Senate Democrats and presidential hopefuls , and Attorney General William Barr has said it is his preferred solution.

“The bill that becomes law will be the better bill,” said Donovan. “Our interest is making sure that credit unions can service businesses that are legal at [the] state level, either through a safe harbor or a law that recognizes [a] state’s authority to decriminalize the substance.”

The issue runs deeper than the challenge of cash management. Cannabis companies face a variety of obstacles, including in acquiring real estate, in land-title issues and in buying insurance coverage.

“Like any other business on Main Street, they have deposit needs, but also payroll, building supplies, expanding and getting into other lines of business, and payments,” said Rachel Pross, chief risk officer at Maps Credit Union in Salem, Ore., which has been working with cannabis companies since 2014. While companies are banned from using card networks, Maps can allow them to wire money and use online banking and pay with direct deposits.

Maps is not lending to the sector for now, although that would change if there’s a change in the federal treatment of cannabis companies. “It’s certainly something we would evaluate much more open-mindedly,” she said.

Pross testified on behalf of CUNA at a February House Financial Services Committee hearing on her institution’s experience of banking and cannabis, emphasizing the risks to the community of cash-only businesses.

Maps has received more than $500 million in cash deposits from cannabis companies in the last two years, she said. “That’s $500 million removed from Oregon’s sidewalks that used to be carried around in backpacks and shoe boxes by legitimate, legal business owners,” she said.

Cannabis banking can be conducted safely and effectively, she argued. The Maps approach is to collect extensive records and to conduct criminal checks on account signers to ensure they are complying with all state laws and regulations. The credit union has invested in the infrastructure needed to monitor and maintain high-risk cannabis accounts and files quarterly suspicious-activity reports on any account suspected of engaging in illegal activities.

Financial institutions that decide not to bank for the sector are still at risk of serving those businesses, she told the hearing.

“Indirect connections are often difficult to identify and avoid because growers and retailers don’t operate in a vacuum,” she said. “Like any other industry, they work hand-in-hand with vendors and suppliers. These are Main Street businesses like the printing company that makes a business card, the landlord that rents office space, and even the utility company that provides water or electricity. Under the existing status quo, a credit union that does business with any one of these indirectly affiliated entities could unknowingly risk violating federal law.”

Most states that have legalized have done so through the ballot, demonstrating the growing public support for cannabis. It’s now up to lawmakers to devise the rules needed to protect them.

“I don’t know whether something will pass in the next year, but it’s important that the issue is gaining momentum,” she said. “The cat’s out of the bag, and there’s no hope of getting it back in.”

HMMJ, +0.55% MJ, +1.27% SPX, +0.33% DJIA, +0.37% The Horizons Marijuana Life Sciences ETFwas flat Monday but has gained 73% to date in 2019. The ETFMG Alternative Harvest ETFwas down 1% but has gained 34% in 2019. The S&P 500has gained 14% in 2019, while the Dow Jones Industrial Averagehas advanced 10%.







