Testifying before members of the Senate Banking Committee on Tuesday, Federal Reserve Chairman Jerome Powell called upon Congress to provide necessary clarity to banks and other financial institutions that wish to participate in the growing cannabis retail market.

Nine states: Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, and Washington permit retail sales of recreational marijuana to adults. According to tax data compiled by the Institute on Taxation and Economic Policy, tax revenues in 2018 derived from state-sanctioned recreational sales surpassed $1 billion — a 57 percent increase over 2017 levels.

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Yet there remains a significant regulatory hurdle facing players and consumers who engage in this market. Almost none of these licensed businesses operating in this lucrative space can legally obtain a bank account, process a credit card, or take a standard business deduction on their federal taxes.

This is because federal law continues to inappropriately define all marijuana-related endeavors as criminal enterprises, including those commercial activities that are licensed and legally regulated under state laws.

The result? Today, this billion-dollar industry operates largely on a cash-only basis — an environment that makes businesses more susceptible to theft and more difficult to audit. It also places the safety and welfare of these business’ customers at risk, as they must carry significant amounts of cash on their persons in order to make legal purchases at retail facilities. Similarly, it needlessly jeopardizes the safety of retail staffers, who are susceptible to robbery.

Weighing in on the issue, Chairman Powell told Congress that dueling state/federal regulations put “financial institutions in a very difficult place. …. I think it would be great to have clarity.”

His remarks came less than two weeks after House members on the Consumer Protection and Financial Institution Subcommittee heard testimony in favor of amending federal banking laws to better facilitate relationships with state-licensed cannabis businesses. Despite the fact that a majority of states now authorize marijuana-related retail transactions, the Subcommittee hearing marked the first time that any congressional committee had ever explicitly discussed the financial hurdles facing the cannabis industry.

The time is long overdue to Congress to rectify this untenable situation. Efforts taken years ago by the Obama administration to provide guidelines for financial institutions seeking to provide services to state-licensed cannabis businesses were rescinded by former US Attorney General Jeff Sessions Jefferson (Jeff) Beauregard SessionsGOP set to release controversial Biden report Trump's policies on refugees are as simple as ABCs Ocasio-Cortez, Velázquez call for convention to decide Puerto Rico status MORE.

As a result, according to the latest data compiled by the US Treasury Department's Financial Crimes Enforcement Network (FinCEN), fewer than 500 financial institutions nationwide are actively providing services to the thousands of existing cannabis-related businesses.

For an industry seeking legitimacy and requiring transparency, the inability to obtain banking and credit access remains a primary but unnecessary roadblock. While some states, like California, have tried addressing this issue on their own, regulators ultimately decided that establishing state-specific public banking rules for the cannabis industry is simply too onerous and cumbersome in the face of federal prohibition. That is why, in order to truly bring the marijuana industry out of the shadows, actions need to be taken by Congress to amend these outdated and discriminatory practices.

No industry can operate safely, transparently, or effectively without access to banks or other financial institutions and it is self-evident that this industry, and those consumers that are served by it, will remain severely hampered without better access to credit and financing.

Ultimately, Congress must amend federal policy so that these growing numbers of state-compliant businesses, and those millions of Americans who patronize them, are no longer subject to policies that needlessly place them in harm’s way.

Paul Armentano is the deputy director of the National Organization for the Reform of Marijuana Laws (NORML) in Washington, D.C. and is the co-author of the book, "Marijuana Is Safer: So Why Are We Driving People to Drink?"