Legislature(2021 - 2022)BELTZ 105 (TSBldg)
05/03/2021 01:30 PM LABOR & COMMERCE
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HJR 14-RESOLUTION: FED SAFE BANKING ACT/CANNABIS 1:31:00 PM SENATOR COSTELLO announced the consideration of HOUSE JOINT RESOLUTION NO. 14, Supporting the passage by the United States Congress of the SAFE Banking Act of 2019, sec. 110606 of the Heroes Act, or similar legislation relating to cannabis-related legitimate businesses' access to financial services. 1:31:37 PM REPRESENTATIVE SARA RASMUSSEN, Alaska State Legislature, Juneau, Alaska, sponsor of HJR 14, related that the bill came about after her husband, who is a mortgage originator, mentioned that somebody had applied for a home mortgage and could not qualify because they worked in the legal cannabis industry. This is despite the 2014 initiative in which 53 percent of voters approved cannabis use. She reached out to industry leaders and learned that these businesses have difficulty renting or purchasing property and they have to pay their taxes, utility expenses, rent, and employees in cash. Believing that there should be a better way, she worked with the congressional delegation to produce HJR 14. It seeks to level the playing field for all Alaskan businesses and increase transparency and safety measures. 1:33:56 PM CHAIR COSTELLO summarized that because cannabis is not legal at the federal level, these businesses do not have access to banking so all transactions are in cash. The resolution asks the federal government to allow these businesses to operate under the federal Secure And Fair Enforcement (SAFE) Banking Act. REPRESENTATIVE RASMUSSEN agreed with the summary. 1:35:00 PM SCOTT BERGMANN, Staff, Representative Sara Rasmussen, Alaska State Legislature, Juneau, Alaska, stated that HJR 14 calls on Congress to pass the Secure And Fair Enforcement (SAFE) Banking Act or similar legislation to provide a safe harbor for financial institutions that provide services to legal cannabis- related businesses. Under current federal law it is a Schedule I felony to accept deposits and conduct other banking business with the legal cannabis industry. He reported that since 1996, 33 states comprising 68 percent of the nation's population have legalized cannabis for medical or adult use. He highlighted that the U.S. House of Representatives passed a SAFE Banking Act and Senator Murkowski and Senator Sullivan are co-sponsors of the U.S. Senate version of the bill. SENATOR GRAY-JACKSON asked if legal marijuana businesses accept credit card transactions. She acknowledged the nonverbal negative response and expressed support for changing the federal law. SENATOR REVAK commented that this is a state's rights issue and he appreciates the legislation. The people of Alaska voted to legalize cannabis; forcing the industry to transact business in cash is dangerous and it impedes commerce. 1:37:50 PM LACY WILCOX, President, Alaska Marijuana Industry Association (AMIA), Juneau, Alaska, stated that on behalf of the industry, she was offering support for HJR 14. She said this resolution would send a message that the Alaska Legislature cares about health and safety. Access to financial services is paramount in protecting Alaskans from the public safety risks associated with transacting business entirely in cash. She described banking as a tool for law enforcement, tax collectors, regulators, and auditors to identify less than honorable industry participants. Passing the resolution in support of the SAFE Banking Act would make Alaska a leader and other states would be likely to follow. MS. WILCOX highlighted the effect of the federal law on the more than 400 cannabis business entities, shareholders, investors, and employees. She said the 10,000 or more employees are probably the most affected by the lack of access to banking services. They are unable to qualify to buy a house or car or take out a student loan to further their education. The lack of access to financial services also prevents cannabis businesses from offering health and retirement benefits to their employees. She mentioned the ancillary support businesses that have found it difficult to conduct business with the industry because large payments for supplies and services must be paid in cash or money orders. General contractors, plumbers, electricians, utility companies, and supply vendors may jeopardize their financial standing by doing business with cannabis businesses. She shared the message she has heard from people in the financial services sector, which is that they would like to offer banking services to the industry but they need assurance through the SAFE Banking Act or similar legislation that doing so would not be a crime. 1:42:37 PM CHAIR COSTELLO opened public testimony on HJR 14. 1:42:51 PM RYAN TUNSETH, representing self, Kenai, Alaska, advised that he is the owner of the retail cannabis business, East Rip. He urged the committee to support HJR 14 or similar legislation to support passage of the SAFE Banking Act or similar legislation. He said this is a nonpartisan issue about protecting working Alaskans. It sends a clear message that legislators from both sides of the aisle will look out for the safety of Alaskans and protect the rights of workers and Alaska businesses. He agreed with previous testimony that moving and handling large amounts of cash is problematic. He pointed out that there is also an efficiency element related to the state's finances. Currently there is nearly $2 million in unpaid marijuana taxes and this would add a tool for the state to audit against that. It would also make it easier for businesses to make those payments. Finally, there is an equity piece that people have mentioned about not being able to secure a loan because the payments may come from the cannabis industry. Deeper than that, being able to secure any type of financing to secure a loan to start a business is very difficult. Because of that, most of the people who entered the industry were able to do it because they had cash by robbing 401 K plans or something similar. He said others who may not have that ability are blocked from entering the industry. There are no other mechanisms for funding. He urged the committee to support HJR 14. 1:45:10 PM MICHAEL MARTIN, President, Alaska Bankers Association (ABA); CEO and General Counsel, Northrim Bank, Anchorage, Alaska, testified in support of HJR 14. He stated that ABA represents the seven banks that have operations in Alaska, including four state- chartered banks and three national banks, all of which have substantial operations in Alaska. He said ABA and its member banks support HJR 14, urging the federal government to adopt the SAFE Banking Act to provide a safe harbor to depository institutions that provide financial products and services to legal cannabis-related businesses. He noted that the SAFE Banking Act is a bank-specific solution that creates a safe harbor and enables banks to serve cannabis-related businesses. The U.S. House of Representatives most recently passed this legislation and it is awaiting action in the Senate. MR. MARTIN highlighted that ABA and the member banks have never taken a position on the legalization of cannabis, but the banks are committed to serve the financial needs of Alaska consumers, businesses, and communities. He said all bankers in Alaska are subject to federal law and cannabis remains illegal so banks currently face substantial risks by offering banking products and services to cannabis-related businesses. Most notably, the issue is the potential loss of the bank's charter and therefore the ability to do business in general. He said the reality is that cannabis-related businesses currently cannot open and maintain deposit accounts with Alaska banks. They cannot engage in electronic transactions, which includes tax payments. They have a difficult if not impossible time obtaining loans from banks. This causes these legitimate and substantially regulated businesses to operate in cash and money orders and find alternative means of financing and funds management outside of the banking system. He also noted that the American Banking Association submitted a letter to Congress in March 2021 supporting the SAFE Banking Act. He thanked the sponsor and urged the committee to support HJR 14. 1:48:52 PM CHAIR COSTELLO closed public testimony on HJR 14. She asked the sponsor if there was another committee of referral. REPRESENTATIVE RASMUSSEN answered no; the resolution received just one referral in each body. 1:49:20 PM SENATOR REVAK moved to report HJR 14, work order 32-LS0617\A, from committee with individual recommendations and attached fiscal note(s). CHAIR COSTELLO found no objection and HJR 14 was reported from the Senate Labor and Commerce Standing Committee.