Jerome Powell, the chairman of the Federal Reserve, has asked the federal government to provide clarification on matters of banking services for the cannabis industry. Powell made these comments while addressing the Finance Committee of the U.S. Senate.
He was referring to the difficulties that financial institutions face as they wish to serve cannabis businesses in states that have legalized the substance, but those same institutions feel hamstrung by federal banking laws that still regard marijuana as an illegal substance.
It is not just banks and credit unions that are in this difficult position. Even supervisors and regulators face the same dilemma because it isn’t clear where they should draw the line between what is permissible under state law and what aspects of the federal banking laws to implement or place on the backburner.
When asked a follow up question, Jerome Powell also revealed that the clarification provided should also put the record straight on issues of insurance for the marijuana industry.
As things stand, the cannabis industry is still unable to obtain insurance in the same way that other businesses can. This is a serious problem because it denies the cannabis industry the protections provided by insurance.
This isn’t the first time that the Federal Reserve boss is expressing these sentiments. He is on record to have stated the same concerns during a press conference last year. Powell is reported to have said that while his work has nothing to do with cannabis, the institution he leads is concerned about the nascent industry because of the possible impacts to the financial sector if things aren’t handled correctly.
Steven Mnuchin, the Treasury Secretary, has also expressed a desire to see the banking concerns of the cannabis industry addressed. He went as far as saying these issues top the list of the matters that his department is concerned about.
If the indicators coming from Congress are anything to go by, 2019 may well be the year when the concerns of Mnuchin and Powell (as well as the cannabis industry) get addressed. A subcommittee of the 116th Congress is already holding hearings at which different stakeholders, such as marijuana businesses, are providing their submissions on matters of cannabis banking.
These hearings arise out of a bi-partisan bill that seeks to make it possible for cannabis businesses to keep their money in banks without any fear that the federal government will act against them or victimize the banks that have accepted to do business with the cannabis companies.
Youngevity International, Inc. (NASDAQ: YGYI) and Cannabis Strategic Ventures, Inc. (OTC: NUGS) will be extremely relieved if the calls by the Federal Reserve boss and the Treasury Secretary result in concrete steps to ease banking for the cannabis industry in the U.S.
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