Legislature(2021 - 2022)BELTZ 105 (TSBldg)
05/03/2021 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HJR14 | |
| SB130 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 14 | TELECONFERENCED | |
| *+ | SB 130 | TELECONFERENCED | |
| + | TELECONFERENCED |
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.