SPRINGFIELD – Supporters of legalized marijuana in Illinois have launched efforts aimed at making it easier for legitimate businesses that sell the product to have bank accounts and accept credit card transactions.
State Treasurer Michael Frerichs, a Democrat, said Monday he supports legislation in the General Assembly that would prohibit state banking regulators for punishing banks or credit unions that provide basic banking services to legitimate cannabis-related businesses.
He also said he is joining with other state treasurers around the country in lobbying Congress for changes in federal laws that prohibit banks from doing business with the cannabis industry.
“The inability of the legal cannabis industry in Illinois to use a bank or credit union for basic services such as check writing, savings or access to capital is a sleeping giant,” Frerichs said during a news conference in Chicago. “We have an industry that handles money hiding in the shadows because banking rules built decades ago have not kept up with changes in behavior and in law.”
Illinois legalized the use of marijuana for certain medical conditions in 2015, and Frerichs said the business now accounts for $136 million a year in retail sales. State lawmakers this year are also considering legislation, which Gov. J.B. Pritzker supports, to legalize adult use of recreational marijuana.
However, marijuana is still illegal in all forms under federal law, and it is also a violation of federal banking laws for any bank to knowingly engage in transactions involving proceeds generated from marijuana-related activity.
During the Obama administration, the Justice Department relaxed some of its enforcement of those laws, especially in states that had legalized at least some kinds of marijuana use, saying it would focus its resources on certain priorities, such as preventing the sale of marijuana to minors; preventing revenue from marijuana sales from going to criminal enterprises, gangs and cartels, and preventing the shipment of marijuana from states where it is legal to states where it is not.
But the Trump administration reversed that policy in January 2018 when then-Attorney General Jeff Sessions distributed a memo to federal prosecutors, effectively instructing them to go back to enforcing federal laws as they were originally intended to be enforced.
“Prior to last year, about 85 percent of our cannabis industry was banked with a single bank in the state of Illinois,” Rep. Kelly Cassidy, a Chicago Democrat, said during the news conference. “As the Trump administration ramped up threats towards the legal cannabis industry, that bank got nervous about potential backlash and informed all of these businesses that they would cease to have a banking relationship with them”
Frerichs said the result of that has been to move the finances of the legal cannabis industry into a kind of underground cash-based economy.
“As residents of this state, we needlessly invite risk to people and property as that $136 million is shuffled from place to place in duffle bags, in the front seat of cars, or the trunk of a car,” he said.
In addition to supporting changes in state-level banking regulations and lobbying Congress for changes in federal law, Frerichs said his office is exploring ways to provide incentives for banks and credit unions to serve the legal cannabis industry.
The companion bills pending in the General Assembly are House Bill 2980 and Senate Bill 2023.
