The committee will now come to order. Before we start, we have two witness panels. Senator brown and i will give our opening remarks and then we will hear from Senators Gardner and merkley. Once the senators have finished their statements, we will proceed with our second panel of witnesses. Today, we will hear from witnesses about the challenges that state sanctioned businesses havee cannabis business when attempting to access mainstream Financial Services. Marijuana or cannabis is currently considered a schedule one drug. Being categorized as a schedule one drug means that distribution, sale, of marijuana or marijuanadrug products is illegal under federal law, and any proceeds from cannabisrelated activities remain subject to u. S. Andnt laundering laws, such as the antilaundering control act. In the last several years, many states have used referendums that have legalized the marijuana and some form, whether recreational or medical use. Currently, there are 11 states, plus the district of columbia, where it is legal to buy and consume Recreational Marijuana and medical marijuana. 22 states, plus d. C. With approved medical marijuana, totaling 33 states and all that have some form of Legal Marijuana. Senators gardner and merkley have introduced Bipartisan Legislation that attempts to ease some of the difficulties resulting from marijuanas illegal status and more lenient state laws. Times withen many senator gardner on this bill and appreciate the hard work each senator has been on this legislation. I look forward to hearing from each of you soon. Our second panel of witnesses will highlight challenges institutions face and banking different parts of the Marijuana Industry, how marijuana related is this is operate, and the complications they have that they have faced in accessing Financial Services, and finally how the safe banking act would work. We will also hear concerns over advocates pushing to legalize safeuana, the effects of banking act in light of marijuana continuing to be illegal under federal law, and health harms and addictions marijuana can lead to. After understanding with the safe harbor would do, what compliances would become and the challenges presented when banking legacy cash, specifically ensuring legacy cash complies with defense and guidance. Having a conversation about whether banks should be able to provide Banking Services to illegal behavior, which is legal in some states, rings up an issue and concern of mind that there has been a big push to choke out Legal Industries from the banking sector. I have said many times, and i will say it again. Operation chokepoint was deeply concerning to me because lawabiding businesses were targeted for operating in an industry at some of the government disfavored. Under fear of retribution, many banks have stopped providing Financial Services to many of these lawful industries for no reasons other than political pressure, which takes the guise of regulatory and enforcement scrutiny. Is anion chokepoint appropriate and Congress Needs to pass legislation to prevent future operation chokepoint initiatives. Senator brown . Senator brown thank you, chairman and senators. Over the past years, voters and legislatures nearly every state have to some degree legalized and decriminalized cannabis. In my state, dispensaries opened earlier this year. It is one of the Fastest Growing in the United States and employs hundreds of thousands of people, any of whom are represented by unions like the united fruit and commercial workers in our union. These americans work hard to support themselves and their families, like workers and other, and they deserve the same rights and protections in states like ohio. Workers and businesses find it difficult to access the Banking System, and that puts them in the americans they do business without risk. No matter how you feel about marijuana, we have a duty to look out for the workers who work in this industry and represent their communities. Dealing in large amounts of cash puts a robbery target on workers, could make it harder to monitor transactions in combat Money Laundering. Getting paid in cash means it is difficult to get i prefer the income to get a loan. Back in force workers to turn to like paydays lenders and Check Services that charge high fees and interest rates, trapped people in a cycle of debt, and make low income people even poorer. Companies and workers who have found a bank willing to handle the business pay high fees and are limited to basic Financial Services. The problem is not just affect cannabis industry but people might not think of. Electricians,ers, Service Retail locations, and other facilities. Lawncare and gardening Companies Like scotts miracle growing in ohio, cell materials and equipment, and all businesses want to serve their customers and support workers without losing their longstanding banking relationships in the process. Community banks and Credit Unions in ohio, and other states want to serve the cannabis industry in these communities. When i recently met with members of the Committee Bank association of ohios, and ohio bankers leanne Credit Union League earlier this year, nearly every hand shot up when i asked if it affected them. We know it comes with legal and supervisory risks because of the tension, as the chairman said, between federal and state laws. It requires extra layers of Due Diligence, challenging it costly for banks and Credit Unions. They play a key role in monitoring for fraud and Money Laundering and the Financial System, and other legal illegal activities. It is important we maintain the framework and access to the Banking System is essential to keep our communities safe and ensure full participation in the economy. We cannot continue to ignore this industry that thousands of workers and communities it affects. We also know that todays hearing is just one piece of the conversation. Ongress must have them marijuana policy. People should not have their jet birders their futures jeopardized by nonviolent marijuana offenses. Let me say that again. People should not be thrown in jail or have their futures jeopardized by a criminal record over nonviolent marijuana offenses. Everyone should have access to the edison they need to cure themselves and their families. I look forward to hearing the perspectives of our witnesses. Chairman thank you. We have two witness panels today. On panel one, will receive testimony from cory gardner of colorado and the honorable jeff merkley of oregon. On panel number two, we receive testimony from ms. Rachel press, the chief risk officer of matz credit union, miss joann sherwood, president and ceo of citywide banks, mr. Garth van meter, Vice President of Government Affairs of smart approaches to marijuana, or sam, and mr. John, ceo and owner of late well enlightened health. Senators gardner and merkley, you may proceed. Senator gardner thank you, mr. Chairman and Ranking Member brown and everyone on the panel for the opportunity to speak to today. This is a difficult hearing and topic. I know that. We were sent here to deal with difficult topics. Im grateful for the opportunity to talk about this. It is the first hearing we have had on this issue as the federal government wakes up to the reality that the cannabis issue is not going to go away, and we must have action. There has been a dramatic shift in americans views over cannabis. Polling shows 55 of americans support legalization of marijuana. 93 , 93 of the American Public medical marijuana. Both parties support legalization. At a time when talk is about how divided we are, we are remarkably united on this issue. Shouldhat support, it not be surprising the vast majority of states have changed their laws. 47 states now allow some form of cannabis. I recognize idaho, nebraska, and south dakota who have not. Than 95 ofnts more the population living in states with laws allowing some form of cannabis. 33 states have legalized medical marijuana and allowed related adult years. It is happening in the bluest of blue, the reddest of red and in colorado, the purple list of purples. It happens in oregon, massachusetts, california, and colorado, alaska, and maine. It happens in conservative states like north dakota and georgia, and rust belt states like pennsylvania and ohio. Last year alone, missouri, michigan, oklahoma, utah, and vermont adopted or expanded marijuana programs. In short, the states leading states leadinghe on this issue in the federal government has failed to respond. It has closed its eyes and covered its ears to hope that she would go away, but it will not. The disconnect has become, as the attorney general has testified, intolerable and untenable. The dramatically expanded cannabis industry presents real challenges for our nation. I have been a skeptic about legalization. I opposed it in colorado. I was concerned about the effects of legalization on Public Safety and breaking with the federal government and adding another intoxicants into our culture. And i did not and still do not want to encourage my children to use marijuana. Several years into legalization in colorado, i can say this guy has not fallen. There are challenges. Colorado has seen an increase in transient populations and concerns of hospitalizations. And cannabis has been illegally trafficked into neighboring states. But according to a pediatrics report, youth use is about 10 lower in legalized states. One strong theory as to why that is the case is legal dispensaries force out illegal sellers and enforce age limits, so youth have less access to marijuana. Are mixed. Crime marijuana offenses are down. Colorado has experienced an increase in violent crime, likely driven by the increase in transient populations in the state. At the same time, they have brought in over 1 billion in tax revenue. They received more than 260 six mayan dollars last year and 266 millionxes dollars last year and marijuana taxes, many ending up for the schools. What makes the Current Situation in tenable is the disconnect between federal and state law. For instance, every single and of his cannabis transaction in colorado was illegal, meaning the dollars involved are the money underunlawful federal statutes. That means any money that collects to legitimate business, plumbers, accountants, landlords, risk becoming federal criminals for serving a client legal under colorado law. The 1. 5 means with billion industry a year in colorado is nearly all cash. Banks will not accept industry money for fear of federal four for keeping those dollars at a banks means we lose the ability to trace whether dollars go and it is harder to ensure all taxes are paid. It makes it easier for criminals and the illicit market to pose as a legitimate and leaves hundreds of thousands of dollars of cash in the state. The state department of revenue has one location only to accept cash so Business Owners in the western part of the state have to drive with tens and thousands of dollars in cash to pay their taxes. It creates a safety problem. They become targets for thieves. A marine was tragically shot and killed on duty as a Security Guard at a dispensary. We are making it hard for businesses to comply with the law. A partner at a Major National law firm told me the Bank Accounts were going to be shut down because they counseled state Legal Cannabis clients. I also heard from city officials in california. For them, lack of inking means when they taken it one milliondollar bond for cannabis business, it takes days to count the cash and several employees after normal work with extra Security Guards in their offices. All of this scratches the surface of the financial problems caused by the disconnect. Veterans, or the epa refusing to use marijuana on pesticides, or confusion created for Law Enforcement or the other problems that contribute to this tenable situation, congress simply must act. Our failure to act seems to be grounded in two incorrect assumptions. The first is we can continue prohibition. We cannot. We are a government of the people, and the people have changed their views, so our laws must change. The second is we can come to a National Consensus for full legalization in the future. We cannot. There are still too many unanswered questions. Many states have legitimate concerns. If they insist on swinging for the fences, they will lose the chance for real improvement. I believe senator merkley recognizes this and i appreciate his efforts to provide concrete improvements for the financial industry with a safe banking act, and i believe senator warren recognizes this. I appreciate her effort to allow the states to move at their own pace, and i thank you, mr. Brown,n, ranking chair that we will act. Thank you for the opportunity to speak. You. Man crapo thank senator merkley . Senator merkley thank you for holding this hearing. We have a fundamental conflict regarding states rights and federal rights. It was back in 1996 that oregon developed a Medicinal Marijuana program. That is a long time ago. We are talking 23 years. Have seent time, we the nation has changed in many states have exercised their state rights, their state rights, to address what they felt was in the best interest of their citizens, but there is a heavy hand in the federal government here trying to make life as miserable as possible for citizens across our nation. So our basic argument is lets stand with states rights, with the judgment from across the that individuals or legislators are doing the best they can for their people, and not proceed to create a federal chaos that is good for Money Laundering and for organized robbery, andod for good for cheating on your taxes, and good for cheating on your payroll but bad for citizens. Lets correct this problem in this fundamental relationship. Im delighted that one of my constituents, rachel cross of the credit union, is here to testify about the viewpoint from our state, but across the country, businesses operating legally under state laws are faced with banking challenges. Major passed their ballot of the vote of the people way back, 23 years ago, and in 2014, past another, regulating adult use cannabis. However, these cannabis businesses and other related businesses, lawyers, landlords, have been operating in all cash without access to Bank Accounts. I have 129 stories from oregon and across the nation i would like to submit for the record, mr. Chairman. Chairman crapo without objection. Senator merkley among the stories, one regards a certified Hemp Processing lab. Hemp. We chose, as congress federally, to legalize hemp as an ordinary yearsoduct and last farm bill. Unfortunately, this provision we have regarding cannabis has been extended in many cases to hamper the ability of the hemp agricultural industry, which is exploding across the country, to operate with our financial normal services. And an attorney in Portland Oregon had portland, oregon, had two Bank Accounts closed because of providing legal services. Do we want situation where citizens operating under states rights, under the best interest of their citizens as judged by their states, are unable to access Attorney Services . That is not by provision acceptable under the law. Forcing legal businesses to operate in all cash is dangerous. I saw this when i joined an Oregon Business man on a trip to our state capital to pay his tax bill. He had his quarterly payment of 70,000 in a backpack. He turned it over on the table and it spread out across the whole table and some of it fell onto the floor. That is a lot of money to carry around in a backpack. We then drove to the state capital one had to go through three levels of security for him to be able to pay his taxes. As you approach the building, there were police cars, patrol members, and then they would tell you which florida go to, and then you had another set of security in the rumor you deposited it, because millions of dollars of cash were flowing in from all corners of the state. This is one of the most absurd things i have ever witnessed, and it created there are a lot of costs that reverberate back to the industry that are really unfair and unacceptable and dangerous. We are putting safety at risk when companies are conducting themselves legally under state passed legislation, state rights. So many constituents have reached out to share their stories. That is why we are delighted you are holding the hearing, for a chance to present the stories to the committee for consideration. I believe i appreciate the work of the cannabis association, the industry association, and normal, the National Association for marijuana laws for sharing and submitting the stories for the record. Across the country, more and more states are following the example established in the initial states more than two decades ago. Red states, blue states, purple states, whether it allows the cultivation of hemp and remedies, such as cvd, it was legalized in the 2018 farm bill, or taxing and regulating medicinal and adult use cannabis. In my home state, over 80 million are taken in taxes. That is 80 million traveling down the roads and highways in duffel bags and backpacks. I have heard from dozens of people operating legal businesses who have been forced to deal entirely in cash or risk having lines of credit cut off. The owner and president of red barn cannabis from my hometown of myrtle creek, oregon, told us not only has he lost accounts for dispensaries but his employees have lost personal Bank Accounts and credit cards. Spouses of employees have lost personal Bank Accounts. Many employees are fearful that as a result of the changes, they will lose their Credit Rating and perhaps even have mortgages or loans canceled. , thank you for holding this hearing, a chance to present this conversation. There is nothing good about forcing the world to operate on cash. It is an invitation to Money Laundering. It is an invitation to organized crime. It is an invitation to robbery. It is an invitation to cheat on your taxes or employees. Lets fix this. Lets honor this states rights vision of all of the state to have said this makes sense here ourur location for citizens. Thank you, mr. Chairman, for providing this forum for this conversation. Chairman crapo thank you, senators. We jointly appreciate the work with of put into this issue. You may be excuse we can move to the second panel. Chairman crapo welcome to our second panel. We appreciate you being with us to share your knowledge and insights on this issue. I have already introduced each of you, so we will proceed in the order you are introduced. You may begin. I should say, i ask all of you to remember to Pay Attention to the fiveminute role so we can of opportunity per questions. Chairman crapo, Ranking Member brown and members of the committee, thank you for the opportunity to testify. I am the chief officer of a credit union, and a Financial Cooperative and salem, oregon, with about 77 million in assets and 65 member owners. I am testifying on behalf of the credit union National Association, representing state and federal Credit Unions and their members across america. In the last five years, we have seen firsthand the many challenges facing National Cannabis institutions. We take no position on cannabis legalization but we acknowledge oregon voters have spoken on the matter. Cannabis usage is regal in oregon, it remains illegal in other states. It is tempting to believe the concerns raised by this hearing only affects cannabis businesses and the Financial Institutions operating were states have cannabis legal. That is wrong. Even Financial Institutions that choose not to bank, the industry risks unknowingly serving these industries. They do not operate in a vacuum and indirect connections are hard to avoid. Letter, in a 2016 lawyers, landlords, plumbers, security companies, and the like out of the nations banking and finance systems served no ones interest. A vastlym interconnected economy, a company like walmart, bank based in arkansas, where it is illegal, could or likely does sell to recreational businesses legally operating in california through its website with the Retail Stores that operate in the state. The same is true for Companies Like albertsons. A Grocery Store chain based in idaho, were cannabis businesses illegal, yet, albertsons has 120 six tours and its neighboring states of washington, oregon, antenna, and nevada. States were cannabis use is legal in some form. These examples show the problem. Every time an employee of the cannabis business uses his or her paycheck, the local credit union depositing proceeds from those sales directly gets impacted by the dilemma for the committee today. It provides explicit legal clearance for Financial Institutions to provide Banking Services to cannabis businesses. It is likely many will be forced to operate in the underground economy and many mainstream as this is what and up with no access to the Financial Services sector. That increases text lost revenue lost tax revenue. A safedit union offers solution. After Extensive Research and risk analysis, our member elected, board of directors, voted to serve cannabis businesses for two reasons, first to serve the underserved, handsspeaks to Hand Community safety. Onlystics show cash business has the risk of crime. An analysis found that that in the absence of banks, one of two were robbed or burglarized with the average single theft ranging from 1000 to 50,000. We are on track to remove over 860 million in cash from the sidewalks of oregons communities in three years time. That is millions of dollars that used to be carried around in duffel bags by legal Business Owners in our state, creating Public Safety concerns for the communities we live and work in. We have established a rigorous screening protocol and have invested in the infrastructure required to appropriately monitor and maintain these accounts. A Compliance Program is regularly reviewed by state and federal regulators with an independent external audit of the program annually. Most importantly, the compliance for uses to serve cannabis businesses is based on the u. S. Department of treasury and guidance. In accordance with that guidance, you have filed suspicious reports on every cannabis business account, prioritizing those records to identify any accounts we suspect could be engaged in illegal activity. Today, 91. 5 of our filings are related to cannabis businesses. In addition, transaction reports exceedingansactions 10,000 in a single business day because the cannabis industry is primarily cashbased. This type of data would not otherwise be available if Financial Institutions like us were not transparently serving the industry. We firmly believe that banking in this sector delivers a significant benefit to Law Enforcement because we are providing continued flow of free, highly detailed information on cannabisrelated monetary activity in the state. In conclusion, we need congress to provide Financial Institutions that choose to serve state sections cannabis businesses with a safe harbor. But unions support the bipartisan safe banking act and i thank you for this opportunity to testify today. Chairman crapo thank you. Ms. Sherwood . Chairman crapo, Ranking Member brown and Ranking Members of the committee, i am the president and ceo of citywide banks in denver, colorado. I am also chair of the colorado bankers association. I appreciate the opportunity to present the views of the American Bankers Association regarding the federal probation preventing banks from handling money related to cannabis businesses. The senate bill safe banking act , and we are grateful to you for your leadership in holding a hearing to discuss this urgent issue, while some lawmakers would prefer to avoid the subject, voters have made it clear the issue is not going away with 33 states already having approved cannabis use with potential cannabisrelated initiatives on the ballot for 2020. Despite the majority of states having adopted a regime of some kind, federal law permits banks from banking for federal businesses, meaning any business that derives revenue from cannabis, including real estate owners, security berms, vendors, cannabis, employees of businesses, as well as investors, violates federal law and could be putting their own access to Banking Services at risk. As the legal state cannabis businesses grow, indirect revenues will continue to expand. Without congressional actions and clear guidance from banking regulatory agencies, that entire portion of economic activity, which operates across all 50 states, may be marginalized from the Banking System. Even in states like idaho and nebraska, or where cannabis has not been legalized for any purpose, still face significant compliance challenges. States where it is legal rely on all kinds of suppliers and Service Providers to support their business operations. For example, the bank may have a customer that is in an anchor business, law firm, payroll company, and some revenue is derived from a cannabis related business in a neighboring state. As a result, they may inadvertently serve businesses and individuals that have an action with and receive funds from Cannabis Companies in a nearby state. That is true despite the banks best efforts to identify and prevent cannabisrelated funds of any kind from entering the bank. In addition to the unintended consequences for answering businesses, communities with legalized cannabis also struggled to address significant challenges of Public Safety, regulatory, and Tax Compliance that go handinhand with cash reliant businesses. In denver, cannabis businesses make up less than 1 of all local businesses, but is accounting for 10 of all reported business burglaries for 2012 to 2016. Thehe tax side, access to Banking System would increase taxefficiency of collections and improve the financial transparency of the cannabis industry. Since many cannabis businesses do not have the bank account, they are forced to pay taxes in cash at local irs offices. Processing such paperbased returns cost the irs nearly 17 times more compared to an efile return and sometimes require local tax offices to invest in additional security measures because of the cash payments. Allowing cannabis related possesses access to the regulated Banking System would also provide improved federal and state oversight of their financial activity. Bank accounts are monitored in accordance with aml bsa requirements. It is helping Law Enforcement address suspicious transactions. An opportunity not available in in all cash environments. Despite the myriad benefits that would result from banking this fledgling industry, widespread consistent and Financial Services will not be possible until congress removes the risk of controlled substances and directs the federal banking guidance to help banks understand procedures that are acceptable. The bipartisan safe banking act would help achieve those goals and we urge the committee to advance this legislation as soon as possible. Thank you for your efforts to address this important issue. Im happy to answer any questions. Chairman crapo thank you. Mr. Van meter . Chairman crapo, Ranking Member brown, members of the committee, thank you. I am the Vice President of Government Affairs for smart approaches to marijuana, a nonpartisan, Nonprofit Organization dedicated to a Public Health approach to addiction and recovery. Formerfounded by congressman patrick kennedy, current editor of the Atlantic David and former senior drug policy advisor to three administrators. Sam believes no one should be locked up or have their life ruined because they got caught with a joint. We also should not create a new addiction for profit industry and the model of big tobacco. The fundamental question for us today is whether we want to promote an increased drug use during an addiction crisis or discourage drug use and help people find recovery and healing. By skipping ahead to a technicality over banking rules, the Marijuana Industry is hoping to gain many benefits of legalization without debate over the Public Health effects, but make no mistake, the policy change around banking would have massive Public Health ramifications. In the past year, 10 states rejected major pressures to commercialize Recreational Marijuana, including new york and new jersey. The safe banking act will allow the expansion of an industry, pushing you, exponentially more powerful forms, of marijuana before any health or societal impacts are fully understood. Banks want to have it both ways. They say they are not taking a positional legalization but they want to profit from illegal proceeds. If they want the benefit from the sales of high potency hot candies and vapes, marketed to young demographics through social media influencers, they should be consistent and argued to have the legalized and advertised, but they are not doing that because they know their public reputation would take a hit. We have repeatedly heard this is about dealing with the cash problem. However, what they are not telling you as many dispensaries options,ave cashless including debit and credit card payments. If you go to the website at the bottom of the first page of appendix a in my testimony, the xposed. Com, video footage confirms they do cash cash acceptless payments. I went to identify two scenarios that could result from the safe banking act, the first is that only legitimate sellers participate. Are hundreds of billions of dollars sitting on the sidelines waiting to invest. The safe and connect could have been drafted to narrowly address pointofsale transactions. Instead, it is written to allow hundreds of billions of dollars to invest. Does anyone think Public Health will be the driving force . Already in canada, the ceo of a major Marijuana Corporation was ofted for a single quarter four sales. In austria, formerly Phillip Morris has made a multibillion investment into the Marijuana Industry. It is also important we dont deal with this in the abstract. In particular, i will refer you to the first page of appendix a, you can see marijuana concentrate called shadow from acreage holdings, which is former speaker John Boehners new gig, notice the marijuana strain, thin mint merrill on growth marijuana girl scout cookies. And those are the responsible operators. I could show you plenty of examples from responsible operators that are much worse. That is the best Case Scenario if everything goes according to plan. There is a darker possibility and it does not require a stretch of the imagination. International cartels have infiltrated legalized states and use the cover of legalization to conduct massive growth operations, massive enough often in massive upscale neighborhoods. It provides an avenue for cartels to infiltrate the Banking System in a more systematic way. In appendix b, there is a letter from the former dea administrator who describes a threat to parallel the multimillion blackmarket Peso Exchange and testimonies from colorado Law Enforcement that lays out an example of how this would work. I would be happy to go into more detail during witness questions on the threats. There still is an opportunity for other witnesses in the Banking Industry to wash their hands of the Marijuana Industry and say we want no part of the nightmare. If they proceed, at least it will be with the full knowledge of what they are investing in, preying on the vulnerable to the market of high potency and kid friendly products and producing new cases of Substance Use disorder and serious mental illness. It took us over 100 years to reverse the Public Health impacts of the tobacco industry, who continually cast doubt on the Health Advocates with defunct science. We have an opportunity today not to repeat those mistakes. Thank you. Chairman crapo thank you, mr. Van meter. Crapo, Ranking Member brown, members of the committee, thank you for the opportunity to share my perspectives on the issue of banking in the cannabis industry. Andame is john ward, owner ceo of live well in heightened health, a cultivator and manufacturer and retailer of cannabis products in colorado. Live well is one of the largest in colorado with 600 employees and approximately one million in annual revenue. We manage 15 real tail stores and color Retail Stores in colorado which collectively serves 4500 people to date. Yet, because of the current status of the law, we are forced to operate and all cash business. I am here representing not only live well but the cannabis trade for which im currently chair. Ctf is a National Coalition of cannabis related businesses dedicated to professionalizing and unifying the cannabis business community. Before launching global, i had a multibusiness career. I began in new zealand and moved into importation, manufacturing and wholesale and baby products. As they grew, i started operations in the u. S. , became a citizen in 2007, and sold my company in 2008. I was looking for my next venture, just as the medical cannabis business got out of ground in colorado and i applied myself to this new field. In 2009, we began a dispensary, acting in accordance with medical marijuana provisions with the colorado constitution. After the voters legalized 2012, ouror adults in facilities became dual use in 2014. But an evolution as a company is not always smooth due to the economy between state and federal laws. Banks and Credit Unions have been reluctant to serve cannabis businesses or have refused to do so altogether. Some things were prevented by doing so from regulators. As a result, we have struggled to maintain Bank Accounts. At one point, i rented out former bank to use as a bolt to. Tore cash another time i had no choice but to walk into the irs in denver with more than 3 million in cash in order to pay federal taxes. Business withg a hundreds of employees and having to make all payments, including payroll in cash. It is difficult and dangerous. Ofs is something thousands state Legal Cannabis companies are struggling with every day. While our company now has more stable banking relationships, we are still far too dependent on cash. Since Credit Card Companies refuse to process cannabis transactions, customers are forced to bring cash into our stores and we must hold until it is positive into our accounts. Until it is deposited into our accounts. These could be avoided if we had normal banking relationships. The views of cannabis banking is not all there, notwithstanding their powers of justice had several memorandum regarding Cannabis Enforcement in 20. Since then, it has maintained its 20 guidance to Financial Institutions in cannabis businesses. Of course, from a Law Enforcement perspective, this makes imminent sense as it is always easier to detect Illicit Activity of proceeds are subject to the transparency of the regulated Banking System. Due to the cost associated with complying with defense and guidance Banking Services for cannabis businesses, our company pays in excess of 3000 per month just to have an account. The Current Situation is challenging for Small Businesses, while we are able to absorb the additional cost associated with Cash Management and exorbitant bank fees that many momandpop shops are not. It should be noted these Small Businesses are also being squeezed by the Internal Revenue code, which prevents Cannabis Companies from conducting standard expenses, like calculated taxes. In fact, the current tax rate is 80 . If there is any hope of helping Small Businesses survive and thrive, we must fix the banking situation so that cannabis businesses are protected like are taxed like any other business. Ui for inviting me today and i look forward to answering your questions. Chairman crapo thank you, mr. Lorde. I want to start my questioning with miss sherwood. Ae safe banking act provides safe harbor for federal banking regulators taking certain actions against depository providing services to the Marijuana Industry. There are many different state beenon marijuana, as has indicated by our witnesses today. The question i have is how, under the safe banking act, would a safe harbor work for a bank providing Financial Services to marijuana related businesses when the banking is across state lines . When you are dealing with different laws and jurisdictions, how does this safe harbor work . Thank you. The state of oregon at the credit union, we only serve the state of oregon. We are limited to a geographic charter as a credit union, so we are not dealing outside of the state lines in the state of oregon. Chairman crapo miss sherwood . We have the same situation, so we are only local with a colorado. We would not deal with outside entities. Chairman crapo mr. Van meter and mr. Lord, you are aware of situations across state lines and there would not be if we were to engage in this legislation . Currently, no, sir. There would be, of course, an excellent opportunity to do so should regulations permit. Chairman crapo there are now a large number of dispensary chains that are multistate operators. I imagine that just by virtue of operating in multiple states, they would be transferring money between states. All right, let me move onto to another question. Mr. Van meter, you raised concerns about the abuse and impacts of the abuse of marijuana that could occur if we have i guess what you are saying essentially unregulated system. That the banking of legitimate marijuana should be prohibited, or are you saying there should be some kind of regulatory system put into place to assure we do not have abusive highintensity products and inappropriate marketing to the vulnerable . Should haveg we that debate before we address the banking question. To address banking and the Institutional Investors entering the Banking System to invest in marijuana firms is premature before we have had a debate over theher or how to regulate addictive potential, the abuse potential. Chairman crapo could you give me a couple further, a little more explanation on the issue you are talking about . You indicated the highintensity products and the damage that this could and is in some cases having. Yes, sir, so if you look at some of the examples i have provided in the appendix, you will notice it is the concentrates that are most heavily marketed through their social media accounts. These products are tremendously high potency. Most people think about marijuana and they think 1 to 3 woodstock weed in terms of the amount of thc. Todays marijuana, the concentrates go up to 95 , and it is a very educational experience if you watch videos of people doing these on youtube. The most common effect is that someone coughs until they vomit and then pass out. It is disturbing to watch. Damaging tremendously products. They have been shown through the few studies done on them with effects to the brain, and these are products to Marijuana Industry is trying to get people to graduate to with emotions to get people to try marijuana concentrates. Chairman crapo thank you. Our unionand frankly banking representatives could respond, as well, is the 2014 guidance helpful and effective, and would you support making it statutorily required for all Financial Institutions in this arena . Guidance isal welcome, and we look forward to being part of this regulation continuing to evolve. Chairman crapo all right. Thank you, mr. Chairman. Not only is the guidance very helpful to our credit union, but it is vital. Frameworks compliance and is the rule book we abide by to do this safely, effectively, and transparently. I agree. In addition, i think it is critical baking regulators, with the guidance we are to follow as organizations, so that we have clear expectations on how to operate. Chairman crapo thank you. Senator braun . For my opening senator brown . Senator from my opening have a couple questions. ,hen you started your business i know you operate in all cash and then you got a bank account, what safety risk as this post to your workers . Incredible safety risks involved in just that volume of cash. Have our, we actually employees through a Company Called a services not directly involved with banking, and then least those employees to our Cannabis Company in order to provide one layer of protection back to those employees. So today, we actually can process, but we do it through a twostep purpose. Prior to that, large amounts of cash is dangerous. Senator is the operation you just mentioned union or nonunion . Nonunion. Senator i mentioned my Opening Statement with commercial workers involved in organized in some parts of this industry, do you see your industry as potentially an industry where a lot of the workers unionize . At this stage, not so much. In order to protect our employees, we provide a 401 k plan, full Company Paid Health ,are, and above average wages and it has been a very robust employees, and we are very proud of that. Have there been efforts to organize the union . Yes, there has been. Senator then you have opposed it. I have not opposed it. Our employees to date have rejected it. Senator you have not weighed in at all . Management has not weighed in at all . No, sir. Senator do you have an obligation to hire people who have served time in prison for possession of marijuana . Forward to that situation. Expungement program has been introduced for felonies, which would be necessary because you cannot understate regulation day employee a felon. Senator you cannot employee a felon, someone employ a felon, someone who has committed a crime, under state law . Yes, sir. Senator you, as an industry, ers across the country, is that something youre working to get change . Definitely. Senator thank you. How is Regulatory Guidance from providing Financial Services to the cannabis industry . Defense and guidance is a rulebook we follow in serving these businesses. It provides us clarity on when to file suspicious activity reports with frequently and how to prioritize those reports to make sure we are flagging activity that could see benefits to Law Enforcement or activity that indicates Financial Crime. Senator i appreciated the chairmans questions. I understand Health Concerns. It is persuasive and convincing to a lot of people. Woul it be better to regulate this industry and the Financial System to address your concerns . Not beenr, that has the experience in the states that it is legalized. There has been crosspollination between the industry going to become regulators and the regulators working with the industry. It is a circumstance whether foxes guarding the hen house and they might be a different set of circumstances if marijuana were placed under the tobacco act to restrict it and see, to ban concentrates and kid friendly edibles, but that hasnt happened in any legalized state so far. Any effort to put a restriction on potency has been defeated by then. They have lobbied against that. Senator we have never seen regulators work from industry or regulators work from industry either, so i can understand how you would think that. We have the same question would you answer the same question . Yes. Senator would it be better to regulate the industry and traditional to address the Health Concerns that mr. Van meter persuasively discussed, would it be better for the to regulate it in Financial Services . We are looking forward to federal regulation. We believe we have robust state regulation. They vary from state to state dramatically. Safeguards a lot of put into those state regulations, but federal regulation is what we look forward to. Senator this is my last question. What is to stop what has services . N financial what has happened in wall street, where wall street basically owns this institution and the regulators, certainly in the trump administration, what is to stop the regulatory capture marijuana the same way he we have seen it in baking . The same way we have seen it in banking . I believe some of these regulations have yet to be fleshed out. I believe we are asking to be regulated and these are the debates that need to happen with regard to the regulation. Here today we are asking for the basics of banking. The ability to put our money in out loans,haps take cetera, which will help social equity and minority equity in Getting Started in these illnesses. In these dismisses. Unless you have highindividualsy way to finance these businesses. Thank you, senator. The topics of todays hearing are important to me as new jersey is in the midst of a large medical marijuana expansion. I have concerns that canadas and cannabis related businesses will continue to find themselves shut out of the financial and insurance systems. For example, if an Insurance Company is required to offer under state law, the insurer faces a series of fundamental conflict between state and federal laws. To end the confusion and legal exposure that arises from the conflict between state and federal insurance laws. Chairman, i would like to letter of support into the record. Can say anything you want, mr. Chairman. [laughter] thank you. When a local business obtains a commercial loan from it Financial Institution, is a common practice for the bar to obtain certain types of insurance . Yes, and it depends on the tape of this is in the type of loan. Environmental, all those are requirements. Is that your experience as well . Yes, it is. What happens when they are unable to get Insurance Coverage . We are technically supposed to force place but if that is not available, we would have to ask them to pay us off. So insurance is typically required on all commercial loans because of a loan collateral. The applicant couldnt obtain insurance, the loan request would be denied. If it was a loan that had already been funded, it would be considered in default. So, either you cannot get a loan, or you have seated in some way, and you need the insurance provided. Correct. Would you agree that providing legal clarity at the federal level would help banks and businesses in the Legal Cannabis industry . I think that makes sense, yes. Can you explain to the committee some of the issues youve run into trying to explain a horrible business affordable business . You have a great south jersey accent, i must say. [laughter] with regard to affordable insurance, i think that is the key word we need to take out. We do have insurance is about two companies we are aware of that just to give an example, directors, the maximum that we could give was 2 million in protections. That cost 100,000 per year and had a deductible of 1 million. Effectively, we have 1 million insurance for 100,000. Extremely expensive insurance. Again, incredibly low dollar values. Nothing that is really going to help the business survive. Perhaps some sort of business interruption. Help a more stable create more competition and more competitiveness than black market marijuana . Most definitely, senator. Are you able to fully ensure all of the businesses in your group . No, we are not. We struggle with this periodically. Volume of insurance we can get, although the value of the insurance is not where it should be. Let me finally go back. Doesntrijuana business operate in a vacuum. They might also need a plumber or an electrician to successfully operate the business. Are also caught up in the confusion around canadas banking. Our businesses at risk of losing their bank account if they work with Legal Cannabis business . Thehey are, and it depends degree to which they participate. We are unable to lend against any property that has a cannabis related industry in it. Services at the credit union, but our experience with these businesses is that they had tremendous difficulty accessing Banking Services. Business would have to choose between accepting a new client and losing their bank account. Correct. Thank you. I thank all of the folks who testified today. , your credittimony union b doesank the industry does bank the industry . That is correct. And yours does not . That is correct. Me, we talked about the transaction reports and the suspicious activity reports. Regulator youre your regulator is requiring you to do, or tell me why you have a marked advantage over the bank . Question, how are you doing this without the regulators coming in and shut you down . Institutionancial has to go through its own risk that they are willing to take to start a new product. Our board of directors chose to take this risk. And that is ok with the regulators . It is. Why arent you doing it . The fundamental issue, this is illegal from a federal perspective. And we are not going to take the reputation risk or the exposure. We are state regulated and federally insured. The example that senator menendez gave about everybody that is associated with lending aney or doing business with cannabis institution is at risk of losing their bank account. , right . That is correct. That they areware servicing the cannabis industry, we are required to do an indepth investigation to determine what percentage of their income. Who would make that determination of awareness . That would be our bank Secrecy Department and then we would look into the ownership and the owners of the company to see if they are related to cannabis distribution. So, does the safe banking act solve all the canadas banking problems . Im not talking about from a financial perspective, im talking about a regulatory perspective. Starts, but unless the regulators are clearly defining the operating procedures going forward, we will not solve anything. Do they have any language that would help solve this problem . That they could put forward in form . At this time, we do not, but im sure we could come up with something. The guidance for banking and marijuana related businesses is adequate to follow in order to service industry. Let me ask you not what this was about, but have hemp. Can you bank hemp . Currently, no, until the Regulatory Guidance comes out. None of the regulatorys have come out with any guidance on hemp . No, sir. We are serving the hemp industry. Quite frankly, they tell us that the Regulation Clarity is we passede out and celeste farm bill and took it off the schedule. Ive just got one question because im just curious. How much do you pay out for year insecurity . Per year in security . We used to have several hundred thousand dollars per year. Largely for internal security, we have probably 20 good paying jobs. And they are secure . Up until recently, yes. Recently. This is an issue that if congress would do anything about it, we should do it. By the way, your testimony is spot on. Fall in the same camp as sen. Gardner s on this, that the people speak and we are representatives of the people and we should move forward, not that im any big supporter of it, because im not. Nonetheless, we are representatives of the people. Thank you, mr. Chairman. I do believe we need some clarity here and i want to go back to the regulations which i know indicated that your credit union is trying to follow particularly around filing. One of the things ive heard from Financial Institutions in my state is that there is some lack of clarity around the term marijuana related businesses, so that creates a level of uncertainty. You talk about some of the shortcomings. Our experience has been positive. Line andefinite clear will look for us to follow. We dont believe that its very unambiguous. You feel there is clarity . Yes. We define marijuanarelated businesses as plannedtouching there arend then businesses that are not touching the plants but are serving the canadas industry. Have you feel about that . It is still illegal. Regardless of the guidance, making it legal or making the then guidelid would us to get more regulations from the banking regulators. In the absence of clear delineation from the banking regulators, we dont feel it is sufficient. And that is why i think so many of us think safe is the right stuff forward to give you all the guidance and protection that i think you need at this becomes more legal in more states very one of the things ive heard is the difficulty in keeping the thc levels in check. I understand crops cant exceed the. 3 thc level according to some of my bankers who are trying to go into the field and doing testing on their own. It seems a little crazy. Can you comment on that challenge of how you maintain appropriate thc levels on an ongoing basis during the growing process . There seems to be some fluctuation. Certainly. Thatim commenting on his as a thc grover, we cannot grow hemp. They are a different animal. But with regard, i can speak regarding hemp. The amount of sunshine or the wet weather affects things just as they do sugars and many other crops. Consequently, depending on where you may be in the growing cycle, if you get a different rating seems a little strange. You think that Financial Institutions should be able to rely on state licensing processes for the purposes of whether you meet or do not meet those levels . The crops have to be tested pretty much immediately at certain points and that is handled by state basis. It is quite necessary. Things i want to associate with ricky member comments, i really think this is the direction we are going to head, we need to make sure that we have good access for Small Businesses, particularly minority owned businesses. Some of those have been disproportionately hurt and clearly the current rules really make it very difficult for folks without access to a large amount of capital to get a fair shot to get into this business. Can you speak a little bit on how these current rulings inhibit and prohibit Small Businesses . Yes, i completely agree, it makes it incredibly difficult without access to High Net Worth individuals, etc. That is really the only access capital. With regard to somebody starting off in this industry without access to bank loans or any sort of Economic Development area or anything like that, this is incredibly different. I think, almost impossible for minorities for anybody actually coming from a very regular situation to get a hold in this industry. If we are going to move forward, i think we need to give the kind of legal clarity and look forward to make that happen. Thank you, mr. Chairman. Thank you all for being here. I know, in your testimony, you talked about the risks related to operating a business only with cash. I would like you to flesh that out a little bit in terms of possible physical risk and the difficulty in complying with other federal laws, especially antimoneylaundering and preventing criminal financing. Just to clarify, are you talking about the risks that the canadas entities are facing with that much cash on hand, or the credit union . Both. We have talked to numerous members who have opened accounts who have described that they have been storing cash in shoe boxes, and the mattresses. Mattresses. There are unscrupulous thirdparty players who are selling cashvaulting services. It is not safe. We had a canadas business that was robbed on a sunday and opened an account with us the following week. It is a major issue. At the credit union, we make sure that cash is not door in our facilities. We dont want to put our staff at risk that way. One of the things we are most proud of is in our collaboration with Law Enforcement. Ive had numerous Law Enforcement officers, that we are providing them data that they would not otherwise get into the industry were un banked. I have one investigator in particular who said that after we had done it two years, the filings are actually helping us what aboveboard cannabis related monetary activity looks like and is actually helping us hone in on the bad guys and he was profusely thanking us for banking this industry and making his life as an investigator easier. Criticalk thats a point, this lack of clarity between federal and state law is driving this industry into an element that it does not want to operate in and it has to interact with shady workers by necessity because its not permitted to bank properly. I just encourage all the republicans on the other side of the dais to make that this is a real issue. There is a real debate about the Health Benefits and risks around marijuana and this is, interestingly, an issue that unites both proponents and opponents of legalization, because everybody supports research and quite reasonably, people who are opposed to legalization and in favor of legalization believe that the ear their views. I have a bipartisan bill to break down the obstacles to research on marijuana, and weve actually worked closely on developing this legislation. But im concerned about the lack of access to Financial Services. Servicesck of banking undermine the ability for research institutions, universities, and hospitals to conduct research . Thank you, and most definitely. Oft, and having any form federal regulation around cannabis has huge implications when it comes to research. Will not recognize any research, even if that was performed currently because it is an illegal substance. Federally. The same goes for many universities conducting research, they are unable to for fear of funding being removed. It puts research in jeopardy. Can i add something to that . If the Marijuana Industry was concerned about research, then i dont think that they would be selling some of these extremely high hang on, im concerned about research. Im going to allow you to answer the question but im not going to allow you to take a hotshot pot shot at the people you are testifying with. If you want to answer the question to the extent that the lack of clarity in federal law, i will allow it. That is a fair point, that there are barriers to research and as you mentioned, supports reducing those barriers to that extent. I was just made aware friday of that issue where we do have a Colorado University who would really benefit from researching this industry and the effects of it. Because, they are taking federal grants and federal subsidies. They are unable to go forward. Thank you. Thank you. First of all, let me say thank you to the chairman and Ranking Member for holding this hearing. This is something many of us have asked for, this is such an important issue, as we can see. Me just say this. As a former attorney general, i that there were 38 ags signed a letter in support of the banking act saying this was an issue that was important for me. I agree with you, i think there are concerns about the concentrations, Public Safety health risks. But i also know the people of the state of nevada voted a majority to go down this path, and i respect that. As a former attorney and in conjunction with my colleagues, i do think there is a concern because we do not have a Financial System. These businesses are forced to operate on a cash basis. The resulting market makes it more difficult to track revenue for taxation and Regulatory Compliance purposes, contributing to a Public Safety trend in cash intensive businesses, often targeting criminal activity, and preventing proper tracking of billions in finances across the nation. I do think that we need to address this issue for those very reasons. We can still study the Health Implications and address what youve talked about when it comes to the concentrations and how they are marketing some of the marijuana. Let me jump back to this idea from a Public Safety perspective. In your testimony before the house, you highlighted that one in every two dispensaries was robbed or vertical rise, the average thief walking away with 20,000 50,000 in a single theft. Fact,e of burglary in could you discuss what other risks are associated with the in my state, generated more than 600 million in revenue last your . As a Bank Secrecy Act expert, my concern is financial activity going outside of state lines. Seeing Money Laundering, Financial Crimes, the financing of revenue for cartels and gangs. Those are all concerned that we have. Through a money going legitimate, transparent Financial Institution relationship allows us to hone in on activity that could indicate Financial Crime that is probably recorded and also helps us ensure that the activity going through our credit union is above board. Thank you. Weve been talking about not only the Banking System, but the legitimate medical marijuana businesses. But we have not talked of the ancillary businesses. As you know, there are so many other companies doing business, legitimate business, these. Stablishments we have landlord, we have accounts. By ahey are also affected lack of Financial System to engage in. Is that correct . Yes, it is. When you talk about your work, i appreciate it. Thatabout i understand you actually, under the guidance, banks are required to file three separate types of suspicious activity reports for canadas businesses. Is that true for any other Small Businesses . No, its not. And can you address that . There are three types. The first is marijuana limited, and that is just saying that by nature of the federal status of cannabis, we would file a suspicious activity report because we are banking the proceeds of a federally illegal industry. Filed every 90 days and technically, its 120 because you have an additional 30 days while after that you then there is the marijuana priority. That is if we read something in one of our quarterly investigations that there is or if we seess activity we are unable to explain. For themes a red flag to take a closer look at this business. Finally, if we determine that we need to close an account, either for behavior that indicates Financial Crime or for noncompliance with our Compliance Program, we would file a marijuana termination, and that notifies them that something is wrong with business and we are closing this account for a reason. The first are, for time, giving Law Enforcement the data they need . That is correct. We have received so much praise from Law Enforcement officers we directed with. Let me open this up to both of you. According to the state of nevada audit last year, is around 500,000 in tax revenue loss due to discrepancies between tracking and tax returns filed with the state Department Taxation during does the current guidance allow Financial Institutions to provide information to state tax agencies when performing audits . Do you know . Thats a great question. I would like to look into that and get back to you on writing on that issue. I cant answer that, but i can get back to you. I think that is a concern for part of the process. If we are to open up the door to Financial Institutions, we need to be tracking for the purposes that we just heard today. Wheres is the money going . How are we tracking this to make sure these are legitimate businesses . I know my time is up, thank you. Thank you. Thanks, all of you, for being here. There is no doubt that we have a serious problem with a cashonly marijuana business, and one that deserves federal attention. Its clear to me that having spoken with banks and Credit Unions in minnesota, the status quo is simply not workable. With 47 states with some form of Legal Marijuana use. However, as we consider this legislation and any religious nation to protect businesses and banks from criminal penalties, i think that we need to realize that, as we are looking at criminal penalties for involvement of his this is with marijuana, we cant forget the thousands of individuals who spend time behind bars for their involvement with marijuana and communities of color, particularly, africanamerican and have paid a disproportionate ofce for generations aggressive enforcement of marijuana laws. We made some headway here with the First Step Act on friday. 3100 people were released next to that. But we all know that there is so much more that we need to do here. So, i think that it would be wrong for congress to act protects business interests without also considering what we need to do to erase the unjust suffering caused by our criminal justice policies. So, im glad to see this committee consider this, and i believe that the senate needs to consider it. Also has a senate responsibility to consider the civil rights implications of this new era of cannabis policy and our constitutional commitments to ensuring equal justice for all. Particular bill and the issues that we have, i would like to return to a question that senator tester touched on, which is the implications of legalized hemp production. Many farmers in minnesota are telling me that it is difficult to get loans. In some cases, very difficult to access payment processing. We be doing to improve this situation . Really, at this point, we are waiting for the regulators to show their guidance. That is the item that is holding us back from going or were. Going forward. Compared to cannabis, we have guidance which provides such a clear framework. With hemp, there isnt as clear a framework. , bute serving under oregon it is complex, for sure. So it is simply waiting for the federal guidance that we need to make this workable. Correct. Let me ask another question. In minnesota, we have legalized medical marijuana. Yet, i hear all the time from banks and Credit Unions or they are struggling to figure out what portion of money that is flowing through the institutions might have come in one way or another run some business related to cannabis. Could you just talk a little bit about how you see that issue . What is the best way we have right now for assessing that, and how might we fix that . That is a complex issue and it speaks to what i talked about in my testimony about the interconnectedness of our economy. A clearpossible to draw line between what is canadas regulated cannabisrelated and what is natural commerce. I use walmart as the example because not only does walmart accept money from employees of canadas businesses in states where it is legal, but they very likely sell basic business supplies to Legal Cannabis websites or stores in other states. It would just be impractical for us not to cash the paychecks of walmart employees, the largest employer in 21 states. It is a messy issue. It is complicated and it is not just about canadas as misses. Is there a way of resolving this under the current framework . I think the safe banking act is an important step. I think that is the answer. I think it is a start, i think we need greater clarity and get a greater framework to go forward. , add something briefly . I think there is a distinction as mentioned before between somebody who is incidental to the Marijuana Industry and him who is directly involved. In the case of some ancillary businesses, the reason why they are worried is because they are directly manufacturing and selling growing lights to marijuana growers. Dr. Thank you. That includes all of our senators. I want to ask a couple of followup actions. I should indicate we got a hearing with the fbi director that a number of our colleagues at as a judiciary hearing. , i doubtce committee that they will make it back. I do expect you will get a number of questions from them following the hearing. I ask you to respond to those as quickly as you can. To take a few moments to pursue a couple of issues. I think a case has been made pretty strongly about the need to get the Banking Industry issues relating to cannabis resolve. Think aame time, i pretty strong case has been made, both legacy cash poses a real problem in terms of providing access for cartels and for other activities. As well as the ongoing operations. I think legacy cash create a special problem. To all of you, you can give brief answers. Is that correct . Is it basically a different issue . Or a more difficult issue . In my testimony, i submitted a letter from former dea administrators that outlines the ongoing threat and there was also a letter or a testimony from colorado Law Enforcement officers talking about the mechanism by which organized crime or the cartel could gain or abuse the safe banking act and the Banking System. Essentially, it boils down to the fact that it is very difficult to tell. This is always going to be a very cashintensive business. Because the states need the tracking systems, track customer data, and those companies around and tell that thats the marijuana in his going to be a proportion of the clientele but does not want to be tracked. It becomes very difficult to tell if somebody is dropping off that much cash at a bank where that money originated. And there are lots of opportunities for abuse. In response, when i began in this business almost 10 years ago, every last dollar was tracked by state regulators short of a colonoscopy. It was very, very intense. I think i had to supply either five or seven years of financial records prior to entering this business. All money that entered this business from colorado cannabis manufacturers, it has been thoroughly vetted. Right now, our bankers, of which we do have basically a conductry, so just be, stress tests upon our business very, very frequently and we are also ordered by a top 10 National Accounting firm. Do you want to respond to that . Sure. Part of our ongoing Due Diligence on cannabis related accounts involves tying Financial Statements which are very friendly audited. These are very professional businesses with attorneys. We are comparing Financial Statements to the financial activity we see going through the account. We are also comparing that information to data that we are getting from the control commission to ensure that everything makes sense. If something doesnt make sense, it is being probably reported to the authorities. We believe that this can be addressed and it can be addressed in a very careful and legit way. I agree. Is a clearthere guidance on how to handle legacy cash, it should be manageable. Question i would like each of you to respond to. I think we have wrists and significant questions both in regard to the cash transactions and the banking transactions but the with regard to, i guess substance of regulation of product. For example, it has already been referenced, the highintensity concentrates. The Marketing Tools and techniques, the targeting of children. And so forth. Do the states that have legalized marijuana, either medical use andor medical and recreational use, do the states regulate those types of access and concentrations and product content issues . Yes, they do. Very, very thoroughly. , regardlessportion of potency, there are portion limits, there are maximum sales sell to at we can customer or a patient. We are tested product of parts per billion in. He. The testing is extremely rigorous. It is in a state tracked system in colorado where every gram is tracked seed to sale. Colorado is being used because of the length of time that we have been in the market as a template in other states. So, extremely thorough. Senator, i wanted to point out. Of my in the appendix testimony, theres a picture of some marijuana gummies. These are considered not kid friendly. They are brightly colored and sugarcoated, in the shape of po ppies. Kids are apparently under the colorado regulation only in theed to gummies shape of cartoon characters or animals or people, but not vegetables or pot leaves. That is the logic as to how those products are legal. I dont know about you, for any of my kids would quickly pick up these products, and that is why poison control calls are through the roof in all legalized states, but particularly colorado and washington where the data is contract area were needed is being tracked. The question i have for you, excuse me. Tougherarguing for a federal regulatory system of content and assets . Or are you arguing that they simply should continue to have a nationwide ban on all marijuana products . We thinkthink legalization in america equals commercialization, and there isnt really a way to stop that from that standpoint, i think there is a benefit to keeping marijuana federally illegal. State level, we think there are important regulations that should be put in place on potency, on product forms as a start. To you have an opinion on this issue . I am not qualified to answer on the state restrictions. The reality is the voters have spoken. It is already in the system, we need to find a way to bank this. The state of oregon regulate the cannabis industry in oregon through the Liquor Control Commission and i understand that this issue is much bigger than just banking. Certainly valid concerns being brought to this Committee Hearing today, but the safe thinking act as narrowly targeted, it is a narrowly targeted protection for financial in the divisions to n 8. 3 billion industry that is already in place today. I think its time for a bipartisan fix to this issue on the banking issue. Thank you. More questions, i will probably submit them to you myself. Again, i appreciate all of you coming today. This is a very important and complex issue that we need to informationnd your that youve provided in your testimony is very helpful in that regard and as i indicated, he will probably be asked to submit further advice and insight to us as you respond to the senators questions. That doesnt include the questioning for today. For the senators who wish to submit questions, those questions are due to the committee by tuesday, july 30. Again, we ask that you, as the witnesses, if you receive questions, respond as quickly as possible. With that, this hearing is concluded. [indiscernible] if you missed any of this hearing on banking and the cannabis industry, you can see it in its entirety on our website. Type banking and cannabis in the search box. House willu. S. Gather for brief speeches. Later today, members will deal with hills dealing with veterans health, housing programs, and a resolution setting the Congress Opposes efforts to boycott israel because of israels treatment of palestinians. Live coverage of the house begins at noon eastern on cspan. Shorts joins us now, a freelance journalist who has written for the new yorker, the New York Times negative. Last year you worked on a profile of Robert Mueller for gq. The headline, Robert Mueller master of silence. Tomorrow, when he testifies first for the House Judiciary Committee and house intelligence committee. What are you expecting . From what weve seen, it sounds like a lot of reiterating what we already know in the report. One thing that is very interesting to me, there is so much ambiguity and legal hairsplitting in the language of the report. He may inadvertently have to deviate from it a little bit just to put it in plain english, in a way that people can understand, particularly about the decisions about prosecuting, whether to charge. Its all very technical when youre reading the text. I wonder if there is a backandforth exchange that might have to put a finer point on these. I think well see him avoiding strenuously having to do that and go beyond the four corne of the documentrs. That gq profile, you wrote it before the mullet report came out. Story, you write that the quiet is part of the uniform
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