The committee will now come to order. Before we get started. We have to win this panels this morning. Senator brown and i will give our opening remarks first 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 the committee will hear from witnesses about the challenges that state sanction businesses in the cannabis industry have one trying to access mainstream Financial Services. Under the controlled substance act, marijuana, or cannabis is currently considered a schedule one drug. Being categorized as a schedule one drug means that the possession, distribution, or sale of marijuana or other marijuana derive projects is illegal under federal law. Any protests proceeds from cannabis remain subject to anti Money Laundering laws such as the Money Laundering control act. In the last several years many have used legalized marijuana in some form. Whether legal or recreational. Use there are 11 states plus the district of columbia where it is legal to buy and consume Recreational Marijuana and medical marijuana as well. And there are 22 states, plus bc that have approved medical marijuana. Totaling 33 states and all that have some form of Legal Marijuana. Senators gardener and merkley have introduced Bipartisan Legislation that tries to ease some of the difficulties resulting from marijuana is illegal fellow states and state laws. I spoken many times with senator gardner on this bill and appreciate the work that each senator has done on this legislation and look forward to hearing from you soon. Our second panel of witnesses will highlight challenges to the institutions face in banking different parts of the Marijuana Industry. How marijuana related businesses operate. And the complications they have that they have faced in accessing Financial Services. And finally how the safe banking act will work. We will also hear concerns about advocates pushing to legalize marijuana. The effects of the safe banking act in light of marijuana continuing to be illegal under federal law. And health and addiction problems that marijuana can lead to. I look forward to hearing more about the safe banking act and understanding how it would work. And what the compliance challenges regarding this would be. The challenges presented when banking with legacy cash. Particularly ensuring that the legacy cash were having a conversation about whether the bank should be able to provide banking for behavior which is legal in some states between legal and other brings up a concern of mine that there was a big push, for weve seen a big push to choke off Illegal Industries from the banking sector. I will say it many time is in many times again. Operation choke point was deeply concerning to me because lawabiding businesses were targeted for operating in an industry that some of the government discriminate against. Many had stopped providing services against these which takes the guys of regulatory and enforcement scrutiny. Operation troll point was inappropriate and congregates needs to pass legislation to prevent future operation choke point initiatives. Senator. Brown senator berkeley and gardner welcome into this panel. Also for the past several years voters in registration in every state have decriminalized cannabis. Legal dispensing threes opened up in colorado leader. The Legal Cannabis industry is one of the fastestgrowing in the United States it employs hundreds of thousands of people many of whom are represented like unions. These americans work hard to support themselves in there. Families just like workers and any under industry in the reserve the same rights of protections and states like ohio. These workers and businesses find it difficult to access the Banking System that puts them in the americans at risk. No matter how you feel about marijuana itself. We have a duty to look out for the workers who work in this industry and the communities they represent. To make sure they have access to the cannabis industry. Theyre operating with a lot of cash. It creates a safety hazard for communities. Its harder to monitor transactions in combat Money Laundering. Getting paid in cash means its difficult to get a credit card, improve your income, get a loan, to improve your personal bank account in force workers to shade to turn to shady outfits like payday lenders. Where they charge high fees and trap them in a cycle of debt and make low income people even more. Pour 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. Plumbers, welders, electricians, 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. Congress must have on marijuana policy. People should not be thrown in jail 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 matzcredit 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 you 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 americansviews over cannabis. Polling shows 65 of americans support legalization of marijuana. 93 , 93 of the American Public support medical marijuana. Both parties support legalization. At a time when talk is about how divided we are, we are remarkably united on this issue. Given that support, it should 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. That represents more than 95 of the population living in states with laws allowing some form of cannabis. 33 states have legalized medical marijuana and 11 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 this it is the states leading 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, both 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. The data on crime are mixed. 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 Million Dollars last year and marijuana taxes 266 Million 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 proceeds of unlawful money under 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. That also means with the 1. 5 billion inry 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 banking means when they taken it one milliondollar bond for cannabis business, it takes days to count the cash and several employees off normal work with extra Security Guards in their offices. All of this scratches the surface of the financial problems caused by the disconnect. Problems with the veterans, or 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. Chairman, ranking chair brown, that we will act. Thank you for the opportunity to speak. Chairman crapo thank you. 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. At is a long time ago. We are talking 23 years. During that time, we have seen the nation has changed and 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 nation 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 crime, and good for robbery, and 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. Oregon passed their ballot major 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 vfor 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 farm product and last years 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 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, mor