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Last week, Governor Kathy Hochul of New York signed into law a measure that eases the process through which financial institutions can work with legal marijuana businesses. The bill was sponsored by Assembly member Crystal Peoples-Stokes and Senator Jeremy Cooney.
It permits the Office of Cannabis Management to offer information about legal cannabis business applicants or licensees to financial institutions. The objective is to make it easier for businesses to comply with antimoney-laundering laws and filing of activity reports required for every marijuana-related transaction at the federal level.
It should be noted that before information can be shared, applicants and licensees would have to give their consent.
A memo attached to the measure states that it would permit financial institutions to access and verify financial as well as personal information for their prospective marijuana clients. It explains that the measure will reduce the costs imposed by additional reporting and compliance measures while also making it easier for financial institutions that want to bank marijuana businesses to comply with federal reporting.
The memo also highlights that handling large cash amounts, which most legal marijuana businesses do because they are unable to secure banking services, puts workers as well as the general public at risk. It notes that accessing financial services affects public safety and that cash businesses are exploited for criminal purposes, which undermines the goal of creating legal, safe and regulated markets.
The memo also highlights that handling large cash amounts, which most legal marijuana businesses do because they are unable to secure banking services, puts workers as well as the general public at risk. It notes that accessing financial services affects public safety and cash businesses are exploited for criminal purposes, which undermines the goal of creating legal, safe and regulated markets.
Currently, marijuana is still classified as a Schedule I substance under the Controlled Substances Act. Despite being legal in various states, this classification makes the drug illegal at the federal level.
In addition to providing banking services to marijuana businesses, the new law eliminates a number of the systemic and financial barriers that can prevent some from taking part in the legal cannabis market safely. Expanding eligibility for participation in this flourishing market may facilitate the opening of more legal businesses at a time when the illicit market continues to flourish in New York City.
Hochul also signed a resolution that offers tax relief to cannabis businesses in the state of New York. Currently, these businesses are still not allowed to make federal deductions under IRS code 280E.
In other news, legislators in Albany have been debating on solutions to deal with issues facing the implementation of marijuana legalization. Last month, the legislators discussed enforcement efforts to quash the illegal cannabis market in the state, the THC potency tax, preventing youth from accessing marijuana and lab testing practices, priorities on licensing and distribution, among other problems.
As more states take matters into their own hands and enact local measures to help marijuana businesses access conventional banking services, the operations of numerous entities such as Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) could have one less hurdle to deal with.
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