Law Enforcement Benefits of SAFE Banking
- *The source for this video and associated copyright are attributed to Senator Daines’ Twitter account. Original video can be found here.
With more than 35,000 licensed & state-sanctioned cannabis businesses, the US cannabis industry is generating billions of dollars in revenue every month, with an estimated 70% which remains in cash.
In 2022, the industry is on track to generate $30 Billion in sales with millions of Americans participating as purchasers in the regulated medical or adult use cannabis market across 37 states.
If, as projected, only 30% of the US cannabis industry is banked, which based on sales just this year, means that 100s of Millions of dollars in cash likely remains unbanked, creating a significant public safety risk for employees, patients, consumers, and police officers.
Law Enforcement Benefits When Licensed Businesses Can Bank Business Revenue
FACTS: What the Cannabis Banking Bill Does
- The Secure and Fair Enforcement (SAFE) Banking Act is a public safety bill that would allow banks to take deposits from lawfully licensed, state sanctioned cannabis companies. It does not change the federal status of cannabis, nor impose any obligation upon any state that has not otherwise decided to have a cannabis program within their jurisdiction.
- SAFE Banking makes it harder for illegal drug cartels to bank their illicit proceeds by ensuring that only licensed operators have access to legal banks.
- SAFE Banking gets cash off the streets and into US banks and credit unions.
MYTHS: What the Cannabis Banking Bill Does Not Do
- SAFE Banking does not change the legal status of cannabis in any state or municipality, or on the federal level.
- SAFE Banking does not force any state, county, or city to allow cannabis in its jurisdiction if it otherwise decides.
- SAFE Banking does not create a pathway for illegal drug cartels to bank their illicit proceeds because of the rigorous KNOW YOUR CUSTOMER & ANTI-MONEY LAUNDERING (KYC/AML) requirements included in the bill.
- When businesses are FORCED to operate only in cash only, monitoring for tax fraud and suspicious activity is significantly more difficult.
- When businesses are FORCED to operate only in cash, they are vulnerable to theft, robbery, and the violence that accompanies those crimes.
- When businesses are FORCED to operate only in cash, hundreds of thousands of employees have to transport their pay and business revenues in cash, making them targets for criminals.
- SAFE Banking helps law enforcement by creating digital, traceable business records and allowing limited resources to target illegitimate cartel activity.
Law Enforcement Case for SAFE Banking
Reduce Cash Motivated Crimes
The principal goal of the SAFE Banking Act is to increase public safety by reducing the amount of cash on hand at state-legal cannabis businesses. A recent analysis of robberies at Washington State cannabis businesses indicated that cash dominates as the target for cannabis store robberies and while cannabis products also play a role, it is almost always in combination with cash.
In recent years, society has seen a shift away from an economy based primarily in cash, but when it comes to cannabis businesses, they do not have equal access to traditional banking services. Forcing businesses to operate in cash increases the potential for crimes of opportunity, as unfortunately has been seen too often in the state-legal cannabis industry.
Dilute Transnational Criminal Organizations
State-legal, regulated cannabis in the United States has led U.S. Customs and Border Protection to focus on other more serious threats, and access to banking helps sort out lawful compliant operators from illicit cartels. According to the Congressional Research Service, “since the first states began legalizing marijuana for recreational use in 2012, there has been a decline in seizures of the drug by U.S. Customs and Border Protection (CBP). CBP seized 582,413 pounds of marijuana nationwide at and between ports of entry in FY2020, which is down more than 80% from 2,822,478 pounds in FY2012.”
Increase Anti-Money Laundering Compliance
The SAFE Banking Act directs the Financial Crimes Enforcement Network (FinCEN) to update its 2014 guidance on filing Suspicious Activity Reports (SARs) for cannabis activity. While 2014 FinCEN guidance does not explicitly address legacy funds, it provides detailed direction as to the filing of SARs that apply to deposit of legacy funds whenever made.
The SAFE Banking Act directs FinCEN, in coordination with federal banking agencies, to update and enhance its guidance to provide the necessary clarity for financial institutions to safely provide financial services to legitimate cannabis businesses. This guidance will continue to address the SARs filing requirements, but it also should address customer due diligence and enhanced due diligence, such as direction for banks to ensure that such businesses comply with all applicable federal and state tax laws and licensing laws.
Reduce Tax Fraud
In a letter to Congressional Leadership, the National Association of Attorneys General noted that “Compliance with tax laws and requirements would be simpler and easier to enforce with the regulated tracking of funds in the banking system, resulting in higher tax revenues.”