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WASHINGTON — As more and more states legalize marijuana, their nascent cannabis businesses are running into a problem.

Since cannabis remains illegal on the federal level, dispensaries and other cannabis-related enterprises can’t open bank accounts, accept checks or take credit cards. They can’t give their employees pay checks because they don’t have an account to draw them against. It’s a cash-only business.

“The current conflict between state and federal law has created a cloud of legal uncertainty for community banks, inhibited access to the banking system for cannabis-related businesses, and created a serious public safety concern,” Gregory Deckard, who heads a bank in Spokane, Washington, where cannabis is legal, told the House Financial Services subcommittee on consumer protection and financial institutions.

The subcommittee held its first-ever hearing a week ago on the fact that most cannabis-related businesses don’t have access to banking services as other enterprises. Legislation being drafted by Rep. Ed Perlmutter, D-Colo., the Secure and Fair Enforcement or SAFE, Banking Act, would allow banks to treat cannabis businesses like anyone else in states that have legalized the drug, even if it remains illegal on the federal level.

At the hearing, lawmakers heard from witnesses who told of the threats cannabis businesses face because they have to deal in cash.

“I fear dispensary employees being at great risk,” said retired Maj. Neill Franklin, a member of the board of the Law Enforcement Action Partnership. “I fear for the safety of those transporting the cash, and I fear for the well-being of employees on payday. Two weeks of pay for one employee can easily exceed a few thousand dollars. That one employee trying to get home safely from work is an attractive ‘score’ for any criminal, and avery easytarget for those who know what to look for.”

Financial institutions fear that they will run afoul of federal regulations if they do business with vendors who sell to cannabis enterprises, said Rachel Pross, chief risk officer of a Salem, Oregon, credit union.

“The simple reality is that growers and retailers in the cannabis industry do not operate in a vacuum,” she said. “Instead, like almost every other business, the industry is dependent upon any number of vendors and suppliers to function. These are everyday businesses like the printing company that makes a business card, the office supply company that fulfills order for pens and copy paper, the housekeeping crew or landlord that cleans or rents office or retail space, and even the utility company that provides that office/retail space or growing location with water or electricity.”

Others opposed to the bill altogether. Jonathan Talcott, chairman of the board of Smart Approaches to Marijuana, said the legislation was a back-door effort to legalize a drug that should remain illegal. The group, whose co-founders include former Rep. Patrick Kennedy, D-R.I., opposes full-scale legalization out of concern that pot is just another addictive substance like alcohol and tobacco.

“The people and businesses who deposit the proceeds from high potency marijuana, concentrates and gummies will still be violating the Controlled Substances Act,” Talcott said. “That is no small matter and it is very disturbing to me that those businesses would be willing to take that risk and overlook its implications in order to service an industry that is so harmful to public health.”

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Jonathan D. Salant may be reached at jsalant@njadvancemedia.com. Follow him on Twitter @JDSalant or on Facebook. Find NJ.com Politics on Facebook.

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