OLYMPIA – Marijuana businesses need access to banks, and the federal government should change the laws to allow that to happen, Washington Treasurer Duane Davidson said Tuesday.
In backing recent federal legislation that would normalize banking services to the legal marijuana industry, Davidson, a conservative Republican, said he finds himself in a position he wouldn’t have predicted a few years ago.
“I didn’t expect to be here, but it’s a very real situation,” Davidson said. “It’s a public safety issue.”
He voted against Initiative 502, which legalized the recreational use of marijuana for adults in Washington, when it was on the ballot in 2012.
“But we live in a democracy, and Washington’s voters solidly backed legalization,” he wrote in letters to the congressional delegation. “We need public policy that can deal with this reality.”
He described himself as “not a natural crusader” for anything related to the marijuana industry but recognizes there are banking and safety concerns for a legal marijuana industry that has to operate in a cash environment because most businesses can’t get banking services. Federal law still lists marijuana as an illegal drug, and federal banking rules restrict accounts from those businesses.
“A drop in all-cash transactions will greatly increase safety for those involved,” Davidson said. “It will also make tax fraud less likely and tax collection and compliance easier.”
He doesn’t agree with legislators and others who suggest a state bank is a solution for providing financial services to the marijuana industry. Such an institution would need access to the Federal Reserve and have Federal Deposit Insurance.
“You’re all going to have the same issue,” Davidson said. “A bank’s a bank.”
Tax collections from the state’s licensed marijuana businesses climbed steadily for a few years, although they’ve been a bit erratic in the past 12 months. But the Economic and Revenue Forecast Council said the state can expect from $743 million in tax collections for the current biennium to $846 million for the 2021-23 budget cycle.
Now Davidson is working with treasurers and attorneys general from other states in search of a cannabis banking solution and trying to drum up support for companion bills in the U.S. Senate and House that would remove federal restrictions on dealing with marijuana businesses for banks in states that have legalized recreational or medicinal marijuana.
He stays out of some of the other issues surrounding marijuana, such as whether it should be given a different drug classification so it’s not grouped with drugs that have no legal use, such as heroin or LSD.
Introduced earlier this month, both bills have bipartisan support, as do the working groups of state officials. With 28 states and the District of Columbia having some form of legalized marijuana, Davidson thinks the country may be at a tipping point for changing the banking restrictions.
“If we haven’t reached a tipping point yet, we’re going to be there soon,” he said.