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New England Council Endorses Legalizing Bank Loans for Marijuana Businesses

April 3, 2021

A regional organization that lobbies for businesses that belong to it is calling on Congress to pass legislation that would allow pot shops and other marijuana businesses to get bank loans and insurance.

The New England Council, which also includes academic institutions and health institutions, has endorsed the so-called Secure and Fair Enforcement Banking Act bill.

The council notes that three New England states – Massachusetts, Maine, and Vermont – have fully legalized recreational marijuana. Medicinal marijuana is legal in the other three states – New Hampshire, Rhode Island, and Connecticut.

Yet getting loans and insurance is harder in the marijuana industry because of the dim view federal law takes toward marijuana.

“Currently, providing banking and insurance services to legitimate, state-licensed marijuana businesses is a challenge for financial institutions. Because marijuana is illegal under federal law, funds generated by cannabis-related businesses are subject to extraordinary reporting requirements under federal anti-money laundering regulations. Therefore, institutions face significant legal and regulatory risks for serving these local businesses,” states a letter dated Wednesday, March 31 signed by Jim Brett, president and chief executive officer, and a former Democratic state representative in Massachusetts.

“The result has been that legal cannabis businesses and their employees operate primarily on a cash-only basis, creating opportunities for tax evasion, money laundering, robbery and other crimes that could negatively impact the region,” Brett wrote.

 

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