Why it matters: Democratic lawmakers are calling on federal financial regulators to update rules that penalize cannabis business owners with prior marijuana-related convictions. The lawmakers argue that these rules, which consider past convictions as “red flags,” prevent these businesses from accessing financial services and disproportionately harm Black- and Brown-owned businesses. They are urging the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to revise its guidance to align with changing state-level cannabis policies.
What they are saying: The lawmakers express concern that the current guidance fails to account for the legalization of cannabis at the state level and could impede the growth of businesses operated by those with prior marijuana convictions. They argue that if a marijuana-related act has been pardoned, expunged, or is no longer illegal under state law, financial institutions should not consider it a red flag when assessing customer due diligence.
The big picture: The letter aims to address the financial challenges faced by cannabis business owners with past convictions and promote fairness in the provision of financial services to state-sanctioned marijuana businesses. By advocating for changes to FinCEN’s guidance, lawmakers hope to rectify the disproportionate impact of past convictions on minority-owned operators and small business owners.
What to watch: It remains to be seen whether federal financial regulators will update the rules as requested by the Democratic lawmakers. Observers will be monitoring any potential changes in FinCEN’s guidance and how they might affect the cannabis industry’s access to financial services. Additionally, the response of other lawmakers and stakeholders will provide further insights into the possibility of reform in this area.
My take: The call to update rules that hinder cannabis businesses with past convictions is a step towards greater equity and inclusivity in the industry. By removing red flags based on prior marijuana convictions, financial institutions can support the growth of cannabis businesses and promote economic opportunities for communities disproportionately affected by the war on drugs. Revising the guidance is an important move to align federal policies with the changing landscape of cannabis legalization and reduce barriers for participation in the industry.
