Senate Banking Committee Could Pave the Way to a Bankable Marijuana Industry
January 11 2017 - 8:30AM
InvestorWire
New York, New York (NetworkNewsWire) - Last month, a letter
signed by 10 U.S. senators arrived on the desk of Jamal El-Hindi,
the acting director of the Financial Crimes Enforcement Network
(FinCEN), requesting guidance on how banking services might be
offered to "indirect businesses" - such as SinglePoint, Inc. (OTC: SING),
Medical Marijuana, Inc. (OTC: MJNA) and
Cannabis Science, Inc. (OTC: CBIS) - that serve
the state-sanctioned marijuana industry. The implications of such
guidance also carry considerable potential for banking players
ranging from small financial institutions to bellwether banks like
Bank of America (NYSE: BAC) and
Citigroup (NYSE: C).
The letter came at the prompting of U.S. Senator Elizabeth
Warren, D-Mass, a member of the Senate Banking Committee that
oversees federal monetary policy, banking regulation and issues
affecting the U.S. currency. It's a widely applauded push, and
SinglePoint, Inc., for one, is banking on this
initiative to clear the way for payment processing providers, such
as its SingleSeed Payments subsidiary, to offer an array of payment
and transaction services to marijuana shops and dispensaries.
According to a recent report in the Houston Chronicle (http://nnw.fm/qq6NB), this action is part of a wider
effort by many policymakers to regularize the patchwork legal
nature of the $7 billion marijuana industry, marked by a lack of
banking options that forces marijuana businesses "to rely solely on
cash, making them tempting targets for criminals."
Although 28 states and the District of Columbia have now
legalized either adult recreational or medical use of marijuana,
the Drug Enforcement Administration (DEA) still classifies it as a
Schedule I substance "with no currently accepted medical use and a
high potential for abuse." Yet, there is growing evidence in the
medical profession and the general population that marijuana has
beneficent therapeutic properties.
Companies like Cannabis Science, Inc. have set
out to develop novel cannabinoid-based therapies for unmet medical
needs, while others like Medical
Marijuana, Inc. - the first publicly traded cannabis
company - focuses on a variety of cannabinoid-based applications
for consumer and medical markets.
In a collection of 60 peer-reviewed studies on medical marijuana
(http://nnw.fm/75PYw) examining the employment
of marijuana in the treatment of a long list of ailments -
including amyotrophic lateral sclerosis (ALS), cancer and HIV/AIDS
- 41 (68.3%) demonstrated positive results. Another 14 (23.3%) were
inconclusive, and five (8.3%) of the trials reported negative
outcomes.
Senator Warren has argued that loosening the restrictions that
force marijuana businesses to transact in cash payments has a
number of advantages.
"You make sure that people are really paying their taxes. You
know that the money is not being diverted to some kind of criminal
enterprise. And it's just a plain old safety issue. You don't want
people walking in with guns and masks and saying, 'Give me all your
cash.'"
There is some hope that the barriers preventing payment services
providers like SingleSeed from doing business with marijuana
establishments will be removed. FinCEN previously lent a
sympathetic ear to similar pleas. In February 2014, the bureau
offered guidance on how financial institutions could provide
services to marijuana-related businesses consistent with their Bank
Secrecy Act obligations.
That earlier guidance appears to have been tailored to
businesses that dealt directly in marijuana like pot shops and
marijuana dispensaries. It did not address the plight of the
indirect businesses that service the marijuana industry, leaving it
up to individual financial institutions to determine how to
classify and treat indirect businesses.
Tossing the buck to financial institutions has had paltry
success: "the number of banks and credit unions willing to handle
pot money rose from 51 in 2014 to 301 in 2016," a figure that
appears encouraging until placed in a wider context. There are
11,954 federally regulated banks and credit unions. In general,
it's still an area dominated by small state-chartered banks and
credit unions. Supporters of a bankable marijuana industry,
however, see an inevitable day when large banks like Bank
of America and Citigroup will offer full
banking services to the cannabis industry.
When that day comes, financial technology (fintech) companies
will have the chance to capitalize on a monstrous opportunity.
SinglePoint's SingleSeed Payments subsidiary, for example, is
already primed to offer ATM, Pay-by-Textâ„¢ and text message
marketing to the cannabis industry. As it stands, progressive
fintechs are in a similar quandary to their federally regulated
counterparts and look forward to further guidance from FinCEN.
For more information, visit Singlepoint, Inc.
(SING) (http://nnw.fm/sing)
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