    [Senate Hearing 118-541]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 118-541

                      EXAMINING CANNABIS BANKING CHALLENGES OF
                           SMALL BUSINESSES AND WORKERS

    =======================================================================

                                    HEARING

                                   before the

                                  COMMITTEE ON
                       BANKING,HOUSING,AND URBAN AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 FIRST SESSION

                                       ON

     EXAMINING CANNABIS BANKING CHALLENGES OF SMALL BUSINESSES AND WORKERS

                                   __________

                                  MAY 11, 2023

                                   __________

      Printed for the use of the Committee on Banking, Housing, and Urban
                                    Affairs

                     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                    Available at: https: //www.govinfo.gov /

                                   ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    58-248 PDF                WASHINGTON : 2026

                COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                           SHERROD BROWN, Ohio, Chair

    JACK REED, Rhode Island              TIM SCOTT, South Carolina
    ROBERT MENENDEZ, New Jersey          MIKE CRAPO, Idaho
    JON TESTER, Montana                  MIKE ROUNDS, South Dakota
    MARK R. WARNER, Virginia             THOM TILLIS, North Carolina
    ELIZABETH WARREN, Massachusetts      JOHN KENNEDY, Louisiana
    CHRIS VAN HOLLEN, Maryland           BILL HAGERTY, Tennessee
    CATHERINE CORTEZ MASTO, Nevada       CYNTHIA M. LUMMIS, Wyoming
    TINA SMITH, Minnesota                J.D. VANCE, Ohio
    KYRSTEN SINEMA, Arizona              KATIE BOYD BRITT, Alabama
    RAPHAEL G. WARNOCK, Georgia          KEVIN CRAMER, North Dakota
    JOHN FETTERMAN, Pennsylvania         STEVE DAINES, Montana

                         Laura Swanson, Staff Director

                   Lila Nieves-Lee, Republican Staff Director

                           Elisha Tuku, Chief Counsel

                      Amber Beck, Republican Chief Counsel

                          Cameron Ricker, Chief Clerk

                          Shelvin Simmons, IT Director

                           Pat Lally, Assistant Clerk

                                      (ii)

                                C O N T E N T S

                                  ----------

                             THURSDAY, MAY 11, 2023

                                                                       Page

    Opening statement of Chair Brown.................................     1
            Prepared statement.......................................    30

    Opening statements, comments, or prepared statements of:
        Senator Scott................................................     3
            Prepared statement.......................................    31

                                   WITNESSES

    Senetor Jeff Merkley of Oregon...................................     4
        Prepared statement...........................................    32
    Senator Steve Daines of Montana..................................     6
        Prepared statement...........................................    33
    Ademola Oyefeso, International Vice President and Director of
      Legislative and Political Action Department, United Food and
      Commercial Workers International Union (UFCW)..................     8
        Prepared statement...........................................    34
        Responses to written questions of:
            Chair Brown..............................................    68
            Senator Menendez.........................................    68
            Senator Fetterman........................................    70
    Kevin A. Sabet, President and CEO, Smart Approaches to Marijuana,
      and Fellow, Yale University....................................    10
        Prepared statement...........................................    36
    Michelle Sullivan, Chief Risk and Compliance Officer, Dama
      Financial......................................................    12
        Prepared statement...........................................    42
    Cat Packer, Vice Chair, Cannabis Regulators of Color Coalition...    14
        Prepared statement...........................................    43
        Responses to written questions of:
            Chair Brown..............................................    70
            Senator Menendez.........................................    71
            Senator Fetterman........................................    71

                  Additional Material Supplied for the Record

    Documents submitted regarding the SAFE Banking Act...............    72

                                     (iii)

                      EXAMINING CANNABIS BANKING CHALLENGES OF
                           SMALL BUSINESSES AND WORKERS

                                  ----------

                             THURSDAY, MAY 11, 2023

                                           U.S. Senate,
              Committee on Banking, Housing, and Urban Affairs,
                                                        Washington, DC.
        The Committee met at 9:45 a.m., in room 538, Dirksen Senate
    Office Building, Hon. Sherrod Brown, Chair of the Committee,
    presiding.

                OPENING STATEMENT OF CHAIR SHERROD BROWN

        Chair Brown. Thanks to Senators Merkley and Daines for
    being here to testify and welcome to our other witnesses on the
    second panel. And thank you to Ranking Member Scott for working
    with us on this hearing.
        The cannabis landscape looks far different than it did even
    a few short years ago. Cannabis has been legalized or
    decriminalized in almost every State. States and localities
    have established licensing and social equity programs to ensure
    that small businesses and communities impacted by the war on
    drugs are part of the growing legal cannabis industry.
        Today, we will hear about the challenges that small
    businesses and workers continue to face, and how we can empower
    and protect workers, provide stronger consumer and small
    business protections, and ensure fair and equitable access to
    financial services, all while making sure that our communities
    stay safe.
        Banking, of course, is critical for small cannabis
    businesses who already face hurdles getting their business off
    the ground. Like any business, they need to apply for licenses
    and raise capital. But that is hard to do when you do not have
    a bank account, or if you do, one that might come with lots of
    fees.
        Without full access to the banking and payments system,
    legal cannabis businesses are forced to operate in the shadows.
    They cannot access SBA loans and know that even if they try to
    apply for a bank loan, they might go through all the costs and
    effort only to be denied. So many small businesses rely on
    friends and family for funding. They deal with lots of cash,
    spend precious time trying to find a work-around, or hire
    expensive third-party service providers that take a hefty cut
    of their slim profits. This puts a robbery target on the backs
    of workers and can make it harder to combat money laundering.
        There are also thousands of workers who cannot prove their
    income to get a mortgage or a car loan, or keep a personal bank
    account, even though their paychecks came from a business that
    is perfectly legal in their State.
        Many of these workers are represented by unions, important
    to this Committee, represented by unions like the UFCW and the
    International Brotherhood of Teamsters, which are fighting to
    make sure that their workers have more power in the workplace,
    in an industry where their physical safety is too often at
    risk.
        The effects of this patchwork system go beyond just the
    cannabis industry. Sheet metal and air conditioning contractors
    build service retail locations and other facilities. Lawn care
    and gardening companies, like Scotts Miracle-Gro in central
    Ohio, sell materials and equipment. They want to continue their
    businesses and serve their customers, and they do not want to
    worry that it will put their bank accounts at risk.
        While small businesses and workers deal with these
    challenges, the large cannabis companies are the ones
    dominating the market. They have ready access to private
    capital and are taking advantage of their workers with unfair
    labor practices to maximize profits. I stand by the workers who
    are actively fighting for higher wages and safer workplaces.
        We do not want the cannabis industry to become like Big
    Tobacco--concentrating industry power in just a few giant
    places. We know what that leads to. It hurts workers and pushes
    out thousands of small businesses, those small businesses
    likely to be owned by Black and Brown entrepreneurs, women, and
    veterans.
        We want small banks and credit unions, MDIs, and CDFIs to
    be able to serve small businesses and their workers, and level
    the playing field in an industry that is increasingly
    concentrated.
        Community banks and credit unions in my State want to serve
    the legal cannabis industries in their communities, and they
    want to rest assured that they can continue to bank their
    existing customers.
        Banks and credit unions should not have to pick and choose
    which services they can offer to customers that happen to earn
    their income from a cannabis business. People in the cannabis
    industry should be able to have the same types of personal,
    commercial, and mortgage loans that any other customer can
    have, with the same protections and without additional costs or
    fees.
        And as we all know, the over-criminalization of marijuana
    has disproportionately hurt communities of color and indigenous
    communities.
        We have a long way to go to right those wrongs. We can
    start by ensuring that members of these communities not only
    benefit from, but also lead, the growth of the legal cannabis
    industry.
        MDIs and CDFIs can help reach these communities that are
    often overlooked--or worse, preyed upon--by other financial
    institutions. And people with prior marijuana convictions,
    especially in States where it is now legal, should not be
    barred from participating in our economy, whether it is renting
    a home or finding a good-paying job.
        We all want safe communities and a safe banking system. We
    all know, after the recent bank failures sparked by a panic-
    induced run, banks must manage the risks of their businesses.
    And they need to understand that failure to meet stakeholder
    expectations can have dire consequences for their customers.
        We must not weaken regulators' ability to protect consumers
    and the banking system from these risks.
        Financial institutions also play an important role in
    monitoring our financial system for fraud, money laundering,
    and other illegal activities. We need to ensure that workers
    and small businesses in the cannabis industry can access
    banking, while maintaining our robust anti-money laundering
    framework.
        I have heard from law enforcement officials who say that
    expanding banking access to cannabis businesses can help
    improve public safety, and direct resources toward truly
    criminal activity.
        Cannabis banking is of course just one part of the
    conversation on marijuana policy. People should not be thrown
    in jail for a product that others are legally profiting from.
    We have been able to work together in the past on a bipartisan
    basis to give those with prior convictions a second chance.
        Everyone, including our veterans, should have access to the
    medicine they need to care for themselves and their families.
    And if we truly care about public health, we should consider
    more medical and scientific research on this topic, something
    that Senator Tester has been particularly involved in, as the
    leader of the Veterans Affairs Committee.
        There is more work to be done to make sure everyone can
    participate in the banking system and the legal cannabis
    economy in a fair, safe, and equitable way. I am glad we are
    building on the progress we have made over the years, and I
    look forward to continuing these conversations.
        Ranking Member Scott.

                 OPENING STATEMENT OF SENATOR TIM SCOTT

        Senator Scott. Thank you, Mr. Chairman. Thank you to both
    of you for being here with us today, particularly to Senator
    Daines for your hard work and dedication on this topic for a
    number of years, as well as acknowledging both Senators Cramer
    and Lummis for their hard work as well, on such an important
    topic.
        Each one of us on this Committee represents different
    States with different marijuana laws, and I understand that
    some of us may be in very different places when it comes to the
    legality of marijuana. In my home State of South Carolina,
    marijuana is largely still illegal, and I, myself, have
    concerns with it.
        And at the Federal level, marijuana is considered a
    Schedule I drug, which means that the possession, distribution,
    or sale of marijuana and other marijuana-derived products is
    illegal and that proceeds from marijuana-related businesses are
    subject to U.S. anti-money laundering laws.
        The Department of Justice and national law enforcement
    groups have expressed concerns that the SAFE Banking Act could
    create loopholes in our money-laundering laws, making it harder
    to catch criminals that traffic weapons, fentanyl, and even
    people--much harder, which is a consequence that we must
    eliminate if this bill is to become law.
        However, there are some States that have legalized
    marijuana, and now we have legal State-based marijuana-related
    businesses throughout the country that depend on a relationship
    with their bank or credit union. And as a former small business
    owner, I understand and appreciate the importance of having
    that relationship with your financial institution. A banking
    relationship is crucial to providing safety and stability for a
    company, both employees and the customers it serves.
        That is why I am looking forward to hearing from our second
    panel of witnesses on how these businesses operate, the
    complications faced by these businesses, and how the safe
    harbor provided in the SAFE Banking Act would work in practice
    or if more is needed to ensure compliance.
        Finally, if we are going to have a conversation about SAFE
    Banking and banking a product that is illegal at the Federal
    level, then we must discuss the importance of banking all
    industries. In the past few years, we have seen certain
    financial institutions cave to political pressures and take
    actions to ``de-bank'' certain legal industries, such as
    firearms and oil and gas entities, due to the wild progressive
    nature of the radical left and their agenda. These same
    institutions that are asking us to take a second look at the
    SAFE Banking Act are frankly standing in the way of banking
    legal entities today. I find that disappointing and quite
    perplexing.
        Congress has a responsibility to ensure that all legal
    industries have access to financial institutions and services.
    I understand that SAFE Banking, as drafted, currently contains
    a provision to ensure that legal industries are banked. De-
    banking legal industries is inappropriate, and I look forward
    to hearing more about that part of the legislation as we
    continue the discussion today. I hope today's hearing lends
    itself to a thoughtful debate on this issue.
        Thank you, Mr. Chairman.
        Chair Brown. Thank you, Senator Scott. The first panel I
    invite Senator Merkley of Oregon--thank you for your work on
    this--and Senator Daines of Montana to speak. Some, as you both
    know, as this has moved perhaps more slowly than many hoped,
    have tried to use this issue as a back-door way to weaken bank
    safeguards that protect our economy. I want to be clear,
    nothing--nothing--goes through this Committee that weakens
    consumer protections and the safety and soundness of the
    banking industry.
        Senator Merkley, please begin.

              STATEMENT OF SENATOR JEFF MERKLEY OF OREGON

        Senator Merkley. Chairman Brown, Ranking Member Scott,
    Members of the Committee, thank you for holding this hearing
    today on the SAFE Banking Act. I got engaged in this issue some
    8 years ago because of the problems created by the cash economy
    in cannabis, and from the beginning it has been a bipartisan
    effort to address these challenges and a compliment to former
    Senator Cory Gardner who worked on this, and it has been a real
    pleasure to work with my colleague, Steve Daines of Montana, as
    we seek to pursue solutions to the advancement of crime through
    a cash economy. And Chairman Brown, thank you for your
    partnership and for the collaboration that brought us to this
    moment today.
        Half of all States across our Nation have some form of
    legalized cannabis--37 States have legal cannabis for medicinal
    purposes, and 21 have legal cannabis for recreational use. It
    is an industry that supports more than 428,000 jobs and
    accounts for over $25 billion in retail sales. It is becoming a
    sizable industry.
        In my home State of Oregon, we had nearly $1 billion in
    sales last year, and the taxes generated from those sales
    helped fund our schools, mental health and substance abuse
    treatment programs, as well as law enforcement and city and
    county needs.
        But our Federal law has not kept pace with Americans'
    changing attitudes toward cannabis, nor with the changing laws
    at the State and local level. That failure has denied these
    legitimate businesses the ability to access the same basic
    necessities as every other business, whether it is access to
    banking and credit card accounts, payroll services, and more,
    because depository institutions and credit unions, are worried
    they may be threatened with prosecution under Federal law, and
    they have largely refused to work with this industry.
        So three-quarters of the cannabis economy operates entirely
    in cash. The few financial institutions that do work with
    cannabis businesses charge extraordinary fees because of the
    risk and the added layers of compliance. And this cash-only
    situation just trickles down far beyond the cannabis retailers
    and growers. It proceeds to affect all of the associated
    businesses, whether they are providing fertilizer or they are
    setting up greenhouses or they are selling seeds, or any other
    way connected, and many of them get thrown off their banking as
    a result of being a supplier to the cannabis economy.
        It affects the employees of these legal cannabis businesses
    who cannot be paid by check or direct deposit. They have to
    walk around with wallets full of cash, worried that they will
    be a target for criminals on payday.
        Forcing legal businesses to operate in a cash economy is
    terrible for accountability, but it is great for crime. It has
    left these businesses, and all that are connected to them, open
    to violent crime, open to money laundering, employee theft, tax
    fraud, and more.
        And Ranking Member Scott, I wanted to mention, there is
    nothing like a cash economy to facilitate money laundering. The
    lack of electronic records in this world makes it really easy
    to move money that should not be moved. So it is a piece of the
    conversation I hope will come out as this bill is explored.
        There is no national database to compile the stats on
    incidents connected to these businesses, but we do have them
    for some States. Over the past 12 months, we have had 129
    robberies of Oregon cannabis businesses, and we have seen that
    in State after State because the criminals know that since they
    are operating in cash, there is cash inside those stores, so
    they proceed to assault them. They know that the employees
    might be taking that cash out for transactions, so employees
    get assaulted.
        So whether it is the robberies, whether it is the assaults,
    whether it is the money laundering, all of it is bad news that
    we can address by passing this bill.
        If these businesses have the ability to accept debit cards
    and credit cards, use the same systems to pay their taxes and
    payrolls, all of those incentives for those crimes goes away.
        The Secure and Fair Enforcement Banking Act, or SAFE
    Banking Act, that Senator Daines and I have introduced and led
    together, would ensure that legitimate businesses, operating in
    compliance with State laws in those States where citizens have
    said they want this--so it is a State's rights issue--will have
    access to the same financial services as every other business.
        And I do want to mention that as Senator Scott pointed out,
    we do have provisions here to address the issue of reputational
    risk being used against certain parts of the economy, in an
    inappropriate way. So we are pleased to add that as a
    strengthening part of this bill.
        Financial institutions will be protected against
    prosecution or asset forfeiture primarily for providing
    services to a State-sanctioned cannabis-related business.
        To be clear, banks will not be forced to provide services
    to cannabis businesses. It is their choice. But if they provide
    that, they will have a safe space for the institutions and the
    industry.
        It explicitly extends that safe harbor to Community
    Development Financial Institutions, that the Chairman
    mentioned, and Minority Depository Institutions, MDIs, who
    serve underserved communities facing that have been
    disproportionately affected by cannabis enforcement in the
    past.
        After much consultation with colleagues and outside
    experts, this bill does include provisions to address concerns
    around equity and issues around law enforcement and money
    laundering raised in a memo by the Department of Justice last
    year.
        As a result, we have a piece of legislation that has
    significant bipartisan support, significant bicameral support.
    It has passed out of the House seven times. It is supported by
    people who believe the time has come to end the cash economy
    that hurts people in so many different ways.
        I would like to submit into the record letters from current
    Oregon cannabis retailers, sharing their own stories of the
    challenges and dangers facing them in this all-cash
    environment.
        Chair Brown. Thank you, Senator Merkley. Before Senator
    Daines begins I would like to recognize Congressman Blumenauer
    from Portland, who is here and worked aggressively in the House
    on this issue. Earl, good to see you.
        Senator Daines is recognized.

              STATEMENT OF SENATOR STEVE DAINES OF MONTANA

        Senator Daines. Chairman Brown, thank you. Ranking Member
    Scott, thank you as well.
        I am very pleased that the Banking Committee is holding a
    hearing on this important topic. Across my home State of
    Montana and in communities across the country, legal businesses
    are facing a public safety crisis. These businesses, often
    forced to operate in all cash, are appealing targets for
    robbers.
        Senator Merkley talked about what is happening in his State
    of Oregon. Just to the north of him, in Washington State for
    instance, 2022 saw at least 100 armed robberies at cannabis
    retail stores, the most in the past 10 years. Tragically,
    several of these incidents ended in bloodshed.
        The SAFE Banking Act would help address a major cause of
    this increase in violent crime by providing a safe harbor for
    depository institutions and service providers to transact with
    State-sanctioned marijuana businesses. In short, this bill
    would make it much easier for businesses to put their cash into
    banks. It is really not that complicated.
        Some of the witnesses today will say that there are
    hundreds of banks and credit unions providing financial
    services to State-sanctioned marijuana businesses, and that
    SAFE Banking is not needed. However, the truth is that only
    approximately 9 percent of the financial institutions in
    America have provided services to any marijuana-related
    businesses, meaning that those who are providing financial
    services face limited competition and charge substantially more
    to bank these clients than other businesses, resulting in
    services being prohibitively expensive for many businesses.
        This legislation would also help Federal and State law
    enforcement distinguish between the legal and the illegal
    marijuana businesses.
        Opponents of this bill will say that SAFE Banking will help
    to grow the $25 billion market for marijuana in the United
    States. However, the real size of the market is estimated to be
    at $100 billion, of which roughly 75 percent is illicit
    cannabis production.
        Allowing cash from legal, regulated businesses to enter the
    banking system will help law enforcement more easily
    distinguish legitimate actors and focus more of their resources
    on prosecuting the illicit market, and in so doing, may
    actually shrink the size of the overall industry and reduce
    consumption in the United States. If nothing else, SAFE Banking
    will greatly increase tax compliance and tax revenue for
    States.
        This legislation is widely supported by banks, by credit
    unions, by the insurance industry, and many other service
    providers who at present do not have clear guidelines for how
    they can safely and legally transact with State-sanctioned
    marijuana businesses. Roofers, plumbers, electricians, and
    other similar service businesses are technically at risk of
    engaging in illegal money laundering simply for putting on a
    few shingles, fixing a leaky pipe, or safely wiring a building.
    In States where these are legally operating businesses, do
    opponents of this bill really believe that hard-working
    tradesmen and women should be put in this impossible position?
        There is a bipartisan coalition of 38 State and territorial
    attorneys general who have come out in support of this bill in
    the past, and we have strengthened it considerably based on
    feedback from the Department of Justice.
        I want to quote one of my county sheriffs back in Montana,
    Lincoln County Sheriff Darren Short, up in the very northwest
    part of Montana. He says this, and I quote:

            It concerns me that businesses have such a large amount of cash
            on hand, which is clearly a liability and a public safety
            issue. I also believe that any all-cash business is going to be
            rife with fraud, so it is an accounting problem as I see it
            too. As far as marijuana legalization goes, the voters of
            Montana made that decision and now it is our role to make it
            safe and make it work. I am happy to support the SAFE Banking
            Act.

        This bill does not legalize marijuana. I personally do not
    support Federal legalization of marijuana. The people of
    Montana voted 57-43 in a ballot initiative in 2020, to legalize
    recreational marijuana.
        The people in States across this country have spoken, and
    it is abundantly clear that the status quo is not only
    untenable, it is very dangerous. The SAFE Banking Act is a
    commonsense bill that can and should pass and would immediately
    improve the public safety threats we are seeing on the ground
    in our States. I ask my colleagues to look at this issue with
    open eyes, and I look forward to hearing their input today.
    Thank you.
        Chair Brown. Thank you, Senator Daines. Senator Merkley and
    Senator Daines, thanks for joining us. I know you have places
    to go, so thanks for being part of this.
        Will the other witnesses please come forward. Three are in
    person. I believe Ms. Sullivan is joining us virtually.
        I will begin the introductions as you are seated.
        Mr. Ademola Oyefeso is International Vice President and
    Director of Legislative and Political Action Department at the
    United Food and Commercial Workers International Union.
    Welcome, Mr. Oyefeso. He was the Senior Director of Political
    Affairs and Strategic Initiatives at the Retail, Wholesale, and
    Department Store Union.
        Dr. Kevin Sabet is the President and CEO of Smart
    Approaches to Marijuana, the Foundation for Drug Policy
    Solutions. He is an affiliate of Yale University's Institution
    for Social and Policy Studies. He received his Doctor of
    Philosophy and Master of Science from Oxford. He is a Marshall
    scholar. Welcome.
        Michelle Sullivan, who is joining us from her home or
    office, is the Chief Risk and Compliance Officer at Dama
    Financial. Previous to joining she held roles as Senior Vice
    President and Director of Corporate Risk Operations and Senior
    Vice President and Director of Corporate Fiduciary Compliance.
        And Ms. Cat Packer is the Vice Chair of the Cannabis
    Regulators of Color Coalition, the Director of Drug Markets and
    Legal Regulation of the Drug Policy Alliance. From 2017 to
    2022, Ms. Packer served as the first Executive Director of the
    city of Los Angeles Department of Cannabis Regulation. She
    received a bachelor's and master's degree, a juris doctor, from
    Ohio State University. I wish you still lived there, but
    whatever.
        Mr. Oyefeso, please begin.

    STATEMENT OF ADEMOLA OYEFESO, INTERNATIONAL VICE PRESIDENT AND
    DIRECTOR OF LEGISLATIVE AND POLITICAL ACTION DEPARTMENT, UNITED
         FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION (UFCW)

        Mr. Oyefeso. Good morning, Chair Brown and Ranking Member
    Scott, and Members of the Committee. Thank you for the
    opportunity to testify today. I am Ademola Oyefeso with the
    United Food and Commercial Workers Union.
        UFCW represents over 1.3 million hard-working men and women
    who work in highly regulated industries, including over 10,000
    workers in the cannabis industry. Our cannabis members can be
    found everywhere from seed to sale. As the leading union in
    cannabis, UFCW is committed to shaping this industry into one
    that provides safe, well-paid, and family sustaining jobs for
    all workers.
        All jobs have challenges, but few industries face the
    unique challenge of a Federal prohibition on access to legal
    banking. Workers are paid in cash, and the cash-heavy nature of
    cannabis retail creates safety and financial problems for
    businesses, customers, and workers. The majority of people in
    the cannabis industry are workers, and in order for these
    workers to have the same opportunities for advancement and
    safety, Congress must directly address the cannabis banking
    challenge.
        There are few banks that are willing to provide their
    services to cannabis employers, and this leaves workers
    struggling to find a place to do their own personal banking.
    Without a bank that will accept their paycheck or proof of
    employment, like a pay stub, cannabis workers struggle to
    purchase homes and often find themselves having to pay higher
    mortgage rates, even though they work in a perfectly legal
    profession in their State. The lack of banking makes it
    difficult to get personal loans for homes and cars as well.
        Ashley Batista, a member of UFCW Local 1776KS and a worker
    at Jushi, a cannabis grow and processing facility in Scranton,
    Pennsylvania, notes the challenges and benefits of banking for
    her and her coworkers:

            I have watched several coworkers who saved up every nickel and
            dime for a downpayment on a home, just to be denied a home loan
            due to the legality of their profession. Cannabis workers face
            negative stereotyping and discrimination also. Having the
            support of traditional banks would help move away from the
            stigma on cannabis and gives us an opportunity to qualify for
            home loans, improve financial stability, and allow us a plan
            for the future.

        Cannabis workers are also targets for robbery and theft,
    because they are known to carry cash. Ms. Batista continued:
    ``Many employers have cut their security teams entirely and
    solely rely on workers to watch surveillance cameras.
    Dispensaries are burglarized and robbed at roughly the same
    rate or greater as cash-intensive businesses. Cannabis workers,
    like every other worker, have a right to safe working
    conditions.''
        Cannabis banking is an equity issue. Equity in this
    emerging industry is an empty and hollow phrase unless it is
    made real and meaningful to the majority of the working people
    living in these communities that were harmed by the war on
    drugs. A regular paycheck goes hand-in-hand with good wages,
    quality, affordable healthcare, and a secure retirement, all
    things that are central to what UFCW negotiates for, for its
    members, and they come with a good union contract.
        The emerging cannabis industry presents an unparalleled
    opportunity for Government to shape an industry from the ground
    up. There are many potential paths for cannabis, but not all
    paths benefit workers in the industry. A 2021 Economic Policy
    Institute report analyzed a high road and a low-road scenario
    for the future of the cannabis industry. Under the low-road
    scenario, cannabis workers are subject to the same harmful
    practices inflicted on workers in similar agricultural
    settings. And under the high road scenario, unionization
    ensures that cannabis jobs are good jobs.
    Access to banking is part of the high road scenario for
    cannabis workers.
        Cannabis workers do not deserve to be treated as criminals
    and should not have to struggle with financial and legal
    ambiguity on the job. On behalf of all workers in the cannabis
    industry, we urge Congress to give the same access to financial
    systems and Federal benefits that all other Americans already
    enjoy.
        Thank you for the opportunity to testify, and I would be
    happy to answer your questions.
        Chair Brown. Thank you, Mr. Oyefeso.
        Mr. Sabet.

         STATEMENT OF KEVIN A. SABET, PRESIDENT AND CEO, SMART
          APPROACHES TO MARIJUANA, AND FELLOW, YALE UNIVERSITY

        Mr. Sabet. Thank you, Mr. Chairman and Ranking Member
    Scott. I did notice that there were five proponents for this
    bill, and while I will not ask for equal time, if you do not
    mind I have about a 5- or 6-minute oral remarks. Thank you.
        So given the obvious and widespread problems in the banking
    industry, I have got to say I am a little surprised that we are
    discussing this particular issue today, at a time when our
    Nation is in danger of defaulting on our debt for the first
    time in our history, when we have an overdose epidemic in this
    country that is only getting worse, and frankly, the banking
    industry is quaking after recent failures.
        I should note the hearing also comes right in the middle of
    the U.S. Department of Health and Human Services' National
    Prevention Week, at a time when suicide rates for young people
    are off the charts, mental health challenges are worse than
    ever before, and frankly, insurance companies are getting away
    with murder by not covering mental illness the way they do
    physical illness.
        The idea that this Committee decided to spend its time
    turbocharging the marijuana industry right now, given
    everything else going on, I think is unfortunate. And we are
    spending your important time talking about how we can turn our
    kids into a great national experiment, an experiment rigged
    toward addiction, misery, and our next public health calamity.
        But because we are here, let me briefly state why this bill
    is not what we need right now. Number one, today's marijuana is
    more dangerous than ever, and this bill would open up the
    marijuana industry to Wall Street hedge fund managers and
    Silicon Valley
    investors who will create even more hazardous products to get
    them in the hands of even more Americans.
        Number two, the bill would open the U.S. financial system
    to activity from transnational criminal organizations who
    intend to harm Americans.
        And number three, it purports to fix essentially a fake
    problem. Today's marijuana businesses are not dealing primarily
    in cash. There are hundreds and hundreds of banks working with
    pot businesses.
        So issue one, let's be honest, today's marijuana is not
    about Woodstock weed. It is not about 3 to 4 percent THC. It is
    more about these problems that I am entering in an appendix in
    my written testimony, these edibles, these candies, these
    cereals, these concentrates, these waxes, 99 percent,
    supercharged THC, that has a deleterious effect on both
    physical and mental health. Imagine what this would look like
    with even more big investors.
        And frankly, you can take it from your former colleague on
    the other side, former Speaker John Boehner, one of the biggest
    proponents of marijuana today, who has said, quote, ``I was on
    the board of a major tobacco company''--Reynolds. ``Do you
    think tobacco is staying on the sidelines? I have talked to
    these guys. They are not going to sit this one out, and they
    have the dollars to acquire whoever they want.''
        That may make big banks, Big Tobacco, Big Alcohol very
    happy, but it will mean more high-potency products in our
    schools and neighborhoods. A drug that is now responsible for a
    third of all schizophrenia cases in young men. According to a
    very large Danish study that was just released earlier this
    week, the number one substance found in youth suicide,
    marijuana, not alcohol, the number one drug for youth going to
    treatment today, because of supercharged marijuana. There are,
    in fact, more daily marijuana users now than alcohol users, a
    number that we would have considered unfathomable 10 years ago.
        These increases we have seen in States like Colorado
    include 1,000 percent increases in emergency room admissions
    for psychosis, schizophrenia, Cannabis Hyperemesis Syndrome,
    which is uncontrollable vomiting, other physical ailments, and
    we have marijuana stores very carelessly recommending, for
    example, according to one study, 70 percent of pot shops
    recommending marijuana to pregnant women, something no medical
    association would endorse. In fact, if we were up here with
    every medical association, almost everyone in this country
    opposes the legalization and normalization of marijuana, which
    I think this bill will expedite.
        Issue two, this bill would give banks cover for federally
    illegal transactions. That is why the better name for this
    legislation, I think, is the ``Addiction Banking Act''. This is
    both a legal and financial bailout that will buttress the
    banking system at the expense of public health. It will
    increase money laundering by transnational criminal
    organizations, giving them access to shell corporations within
    the United States. It will empower further foreign cartels who
    are already targeting kids and communities of color that are
    victimized by this industry.
        Let's be frank here. Banks have a horrible track record
    when it comes to money laundering with other illegal drugs like
    fentanyl. That is why five former drug czars, including a few
    of my former bosses, in both Republican and Democratic
    administrations, oppose this, and I have entered that in my
    written statement as well.
        And as many of you have likely heard from law enforcement
    in your communities, cartel activity now is booming in legal
    States. California Governor Gavin Newsom declared a state of
    emergency to contend with cartel activity in the marijuana
    market, which now dominates about 80 percent of that market. We
    should not be fooled this will help when we open up this
    illegal industry to the banks.
        And finally, issue three. The U.S. Treasury Department says
    that marijuana businesses currently work with over 800 banks in
    this country. Multiple State regulatory bodies, including
    Colorado, on the record, have admitted that marijuana
    businesses are being banked by State-regulated banks and credit
    unions.
        We did our own investigation at SAM, the organization I
    founded with former Congressman Patrick Kennedy, because we do
    see this as a nonpartisan issue. Our own investigation found
    that pot shops were more than willing to take debit and credit
    cards and other noncash means.
        I have to say one final note as I conclude. As someone who
    worked in the Obama administration most recently and is
    dedicated to making sure our drug laws are up to date, evidence
    informed, and equitable, we are not calling to arrest workers
    or arrest users of marijuana, throw them in prison, and
    increase criminal justice. But on the other hand, why would we
    normalize and commercialize today's super-strength marijuana,
    at a time when fewer than 2 percent of marijuana businesses are
    owned by people of color, when disparity of arrests is still
    happening in legalized States. In fact, young marijuana arrests
    in some legal States are going up, not down. When people like
    John Boehner represent the industry, and groups like the NAACP
    Illinois are our partner, warning us of persistent inequities
    in neighborhoods saturated with pot shops the way they are
    already inundated with liquor stores and the like. I think we
    would be fanning the flames on the addiction crisis that is
    staring us right in the face.
        The ``Addiction Banking Act'' would reward the industry for
    sidelining and targeting communities of color, so I urge you,
    Members of the Committee, to do the right thing and not make it
    even easier to normalize and commercialize this very new
    substance, today's super-strength THC, and not make the same
    mistake as we have with other addictive industries in the past.
        The fundamental question before us today is whether we
    should promote and normalize drug use during an overdose and
    addiction crisis or discourage it by helping people get
    treatment, achieve full recovery, and discourage use among
    youth, of all drugs.
        Let's remember that it took us almost 100 years to reverse
    the public health impacts of the tobacco industry, who
    continually cast doubt on public health advocates with
    industry-funded bunk science. We have an opportunity today to
    not repeat those mistakes.
        Thank you for your time, and I am happy to answer any
    questions.
        Chair Brown. Ms. Sullivan is recognized from a remote
    location.

       STATEMENT OF MICHELLE SULLIVAN, CHIEF RISK AND COMPLIANCE
                        OFFICER, DAMA FINANCIAL

        Ms. Sullivan. Chairman Brown, Ranking Member Scott, and the
    esteemed Members of the Committee, my name is Michelle
    Sullivan, and I am the Chief Risk and Compliance Officer for
    Dama Financial. I am honored to testify before this Committee
    to share my experiences and lessons learned in cannabis banking
    as well as my opinion on the SAFE Banking Act. I have spent my
    career in banking, risk management and compliance, and most
    recently with a regional bank in Kansas City, Missouri, before
    joining Dama in 2017.
        Dama is the largest and the first end-to-end provider of
    banking and payment solutions for legal cannabis businesses in
    the United States. Today, we partner with banks which allows
    our clients a single relationship with multiple financial
    solutions. This includes everything from access to banking and
    merchant services to cash management, payments, POS, and
    inventory management solutions, to also include solutions for
    their employees.
        Dama was founded in 2016, to provide banking access to
    licensed cannabis-related businesses with a compliance-first
    approach following the provisions outlined in the ``Cole Memo''
    of February 14, 2014, as well the FinCEN Guidance, BSA/AML
    requirements, and all applicable Federal and State laws.
        Dama partners with banks that would like to provide access
    to banking but do not always have the resources or expertise to
    run a high-risk, cash extensive business and/or banking program
    on their own.
        Dama has developed the gold standard of compliance
    frameworks to ensure we know our customers through enhanced due
    diligence, onboarding, and continued oversight. We do so in a
    safe and sound manner to minimize the risk of money laundering
    by preventing illegal operators and illicit cash from creating
    vulnerabilities in our financial ecosystem.
        To understand the true source of funds, Dama goes beyond
    the high-risk banking requirements of Federal law by doing the
    following: drilling down to 10 percent of ownership under the
    UBO rule and performing onsite inspections and risk assessments
    that encompass inherent and residual risk throughout the
    lifecycle of the relationship. We reject a fair number of
    businesses from qualifying for our services because they are
    not transparent with us or they do not meet our diligent
    standards.
        Because of these experiences, we believe the SAFE Banking
    Act should be stronger and encompass a more stringent statutory
    framework. We cannot simply rely on existing guidance without
    more robust legislation from Congress. It is quite possible
    that banking standards could be more lax after the passage of
    the SAFE Banking Act than there is today.
        If Congress gives financial institutions a ``safe harbor''
    to provide services to cannabis-related businesses, it must
    provide a tougher framework than the existing guidance. At a
    minimum, a financial institution should follow enhanced rules
    regarding board-approved risk limits, deposit ratios, and
    reporting criteria when limits are approached or breached, in
    addition to technology and staffing expertise. We must also
    include due diligence and ongoing monitoring requirements,
    especially as it pertains to cash deposits and legacy cash.
        We also believe there is serious potential for confusion in
    the banking industry following the passage of this legislation
    the way it is currently written. Will the cash truly get out of
    the system? We do know that credit card companies have policies
    against banking illegal products which may prohibit cannabis
    transactions running across those rails even after the SAFE
    Banking Act passes. Without solving the larger
    decriminalization issues, we worry that the passage of the SAFE
    Banking Act alone could actually provide worse problems and a
    sense of resolution while huge conflicts at the Federal level
    still exist. This will make it difficult for some financial
    institutions to proceed.
        Last, as Congress wrestles with this issue, we think it
    should do so with a clear understanding of the opportunities
    for cannabis banking today. This problem is not as dire as it
    once was. According to FinCEN, there are over 700 financial
    intuitions that work with legal cannabis businesses. Every
    company that meets the risk standards that I have briefly laid
    out should have access to a banking solution in America. In my
    opinion, we should pause and provide more teeth to the existing
    bill to protect the financial and banking industry as a whole.
        We are happy that Congress is having this hearing today. We
    believe that Congress should study these issues very carefully
    before moving forward. We look forward to answering your
    questions and working with Senators from both parties to
    resolve the cannabis banking issues our country is facing.
    Thank you.
        Chair Brown. Thank you, Ms. Sullivan.
        Ms. Packer, welcome.

      STATEMENT OF CAT PACKER, VICE CHAIR, CANNABIS REGULATORS OF
                            COLOR COALITION

        Ms. Packer. Good morning, Chairman Brown, Ranking Member
    Scott, and Members of this Committee. I am honored to be
    addressing you for today's hearing. My name is Cat Packer, and
    I serve as the Vice Chair of the Cannabis Regulators of Color
    Coalition, the Director of Drug Markets and Legal Regulation
    for the Drug Policy Alliance, a cannabis policy practitioner in
    residence at the Ohio State University Moritz College of Law,
    Drug Enforcement and Policy Center, and an advisor to the
    Parabola Center on Law and Policy. I also had the opportunity
    to serve as the first Executive Director of the city of Los
    Angeles Department of Cannabis Regulation, where from 2017
    until last year, I led the city's efforts to license and
    regulate commercial cannabis activity.
        I first hope to contextualize the topic of today's hearing
    within the larger scope of challenges experienced by Americans
    across this Nation due to cannabis prohibition and
    criminalization. While small businesses and workers in State
    legal cannabis industries should not be treated like criminals,
    providing protections to financial institutions, as the SAFE
    Banking Act would, may be a first step to addressing banking
    challenges, but it would not change the fact that small
    businesses and workers in the cannabis industry will still be
    considered criminal under Federal law, nor would it end the
    country's failed approach to marijuana or address the harms of
    cannabis criminalization and related collateral consequences,
    nor would it address related concerns and challenges of
    researchers, doctors, patients, veterans, immigrants,
    consumers, or State and local governments. In order to address
    these issues we need both Congress and the President to take
    actions on more comprehensive reform.
        Access to financial services is a basic necessity for any
    small business. During my time as a local regulator, I worked
    closely with businesses who continuously shared with me the
    challenges caused by unfair access to cannabis banking. Many
    small businesses and participants in the city's Social Equity
    Program described a lack of access to capital, specifically
    commercial loans and SBA access, as their number one barrier,
    not only to entering the legal market but also to being able to
    compete once licensed.
        And while I know the city of Los Angeles has a unique
    market for a number of different reasons, I know that there are
    other States that share these concerns and challenges, and
    these challenges are shared by regulators across the country
    whose licensees all struggle with inequitable access to
    capital, and regulators see access to banking as an opportunity
    to promote public safety, economic opportunity, and support the
    implementation of an effective regulatory system.
        While access to banking is an important issue for many
    stakeholders, small businesses, workers, and State and local
    regulators alike, there is no better example than the existing
    banking industry to illustrate the reality that access to
    banking is not necessarily fair access to banking. In 2021, a
    Brookings Institution report found that Black individuals and
    businesses faced marked disparities compared to their White
    counterparts and access to banking services, and deposits,
    mortgage credit, and small business loans.
        Moreover, a 2021 Federal Reserve report found that Black-
    and Latino-owned businesses were less than half as likely as
    their White counterparts to be fully approved for loan
    applications during the last year.
        Last summer, with the support of Ohio State University, the
    Cannabis Regulators of Color Coalition published a paper that
    called out the difference between expanded access and fair
    access, and I am happy to see that after spending last year
    working with stakeholders and leaders, folks are making efforts
    to ensure that the SAFE Banking Act does not just provide
    protections for financial institutions, but that it includes
    minor and technical changes to ensure that banking access is
    fair. That is, after all, what the F in SAFE stands for.
        I ask that you refer to my written remarks for more
    comprehensive details about how minor technical amendments to
    the SAFE Banking Act can make the bill and cannabis banking
    more fair. But I would like to provide one quick example that
    illustrates how SAFE can be further improved to promote
    fairness.
        Existing guidance from Federal banking regulators considers
    criminal records a red flag or an automatic indication that a
    business may be engaged in illegal activity. One of our
    recommendations is to ensure that this updated guidance clarify
    that cannabis criminal records, specifically those that have
    been expunged or are for activity that has been pardoned or is
    no longer prohibited under State law, are not automatically
    considered red flags. Addressing this issue would allow SAFE to
    better promote fairness.
        It is true that small businesses and workers cannot afford
    to continue to be shut out of banking, but it is also true that
    they cannot afford for the disparities in traditional banking
    to become the new norm for cannabis banking, and moreover,
    communities all across America cannot afford for the harms of
    cannabis criminalization to continue unchecked.
        Thank you for your time and consideration, and I look
    forward to working with the Committee and Congress as we build
    momentum to address not only the challenge of cannabis banking
    but all of the challenges caused by the failed policy of
    cannabis criminalization. Thank you.
        Chair Brown. Thank you very much, Ms. Packer.
        The questions will begin by Senator Reed.
        Senator Reed. Well first let me thank the Chairman and the
    Ranking Member for the courtesy. Thank you all for your
    testimony.
        This SAFE Banking Act, in the popular image, is focused on
    cannabis sales and financing involving those sales. But there
    is one section in the bill, Section 10, that does not apply
    exclusively to cannabis. It would apply to any entity that is
    engaged with the bank, a company, or a customer. And it would
    make it more difficult for Federal regulators to raise the
    alarm about relationships with any customer that presents
    significant risks to the bank. And, as I said, it is not
    limited to the marijuana industry--cannabis industry--so it
    could allow pyramid schemes or all sorts of other interesting
    activity to go on without an effective response by the
    regulator.
        In addition, Section 10 would require a bank to provide a
    notice to a customer when the Federal Government suspects they
    may be engaging in illegal activity. That is like warning
    people to get out of town, and take the money and run, I think,
    is the popular image. And it has drawn some criticism, not all,
    some criticism, but significant criticism from consumer groups.
        Mr. Chairman, I would request unanimous consent to
    introduce a letter from the Americans for Financial Reform,
    Consumer Action, Consumer Federation of America, National
    Association of Consumer Advocates, the National Consumer Law
    Center, and the National Consumers League.
        Chair Brown. Without objection, so ordered.
        Senator Reed. Thank you.
        All of that being said, Ms. Packer, you had very thoughtful
    comments in your testimony regarding technical amendments, the
    Act, et cetera, to improve it. And would it be sensible, in
    your view, to limit the scope of this Act simply to the
    cannabis industry and not have this wide-open restraint on
    Federal regulation?
        Ms. Packer. Thank you, Senator. I have to be frank in that
    my expertise and engagement with this bar has been on cannabis
    banking. That being said, this hearing today is about cannabis
    banking. This bill is supposed to be about cannabis banking.
    And for that reason I think if there is an intent to use the
    bill to do something else then maybe it is appropriate for
    another bill.
        Senator Reed. I think that is great. In fact, I think your
    reaction is probably the reaction of everyone, saying this is
    all about cannabis banking, and suddenly we have a provision
    that would stop a regulator from going to a bank and
    questioning a relationship with a customer who may be a
    surrogate of a foreign power that is doing things here we do
    not like to be doing.
        And so I would hope that we could look very carefully at
    this. I think the trajectory that is designed to provide
    reforms for cannabis is appropriate. We have a little more work
    to do. But I think this is definitely something that we can
    narrow considerably.
        And with that, Mr. Chairman, thank you again for your
    kindness, and I yield.
        Chair Brown. Thank you, Senator Reed.
        Senator Scott is recognized.
        Senator Scott. Thank you, Mr. Chairman.
        Ms. Sullivan, thank you for your testimony today. Given
    your role as the Chief Risk and Compliance Officer at Dama, it
    seems that you are very familiar with compliance and risk
    regimes when it comes to safe banking. Can you walk me through,
    if the SAFE Banking Act were to become law, how the current
    safe harbor for financial services institutions would work?
        Ms. Sullivan. Thank you. If the SAFE Banking Act, the way
    it was written today, was pushed forward, the concern would be
    is that there would not be steps to ensure that financial
    services that would be provided to cannabis-related businesses
    would be legitimate. There would not be proper governance and
    controls in place, that financial services would have to ensure
    that they were doing, to include really addressing some of the
    major things that we focus on, and a lot of the other financial
    institutions in the industry today focus on, which is legacy
    cash.
        We also know that credit card networks do not allow
    cannabis transactions today. We know merchant acquirers are
    establishing fictitious names, such as flower shops, to process
    these transactions. So money laundering is happening. And
    really, honestly, it is going to dilute the standards that many
    in the industry are performing today.
        Senator Scott. Thank you. One final question for you. In
    your testimony you discussed requirements to ensure that banks
    have the appropriate risk controls and processes in place if
    they were to bank cannabis. Can you give a little more detail
    on what those requirements would look like? You started to talk
    about the legacy cash and other issues. I would love for you to
    continue that conversation.
        Ms. Sullivan. Absolutely. So with our program and with what
    our recommendations are, we would like to see that financial
    institutions really have to have a strong and robust framework.
    They need to really work with their board to make sure they
    have board-approved risk limits. Their deposit ratios versus
    their total deposits need to be within line so they do not have
    a concentration. Legacy cash, for example, all legacy cash
    deposits must provide documented evidence of the source and the
    origination of that ownership, to include any evidentiary
    documentation for those cannabis transactions.
        What is important to note is just because cash gets banked,
    it does not mean that money laundering is not occurring. If
    financial institutions are not taking their role and
    responsibility to know who their customers are, ensure that
    they understand where the source of funds are coming from, and
    do the continued due diligence and transaction monitoring that
    has to be done in this industry, it would be a money
    launderer's holiday if banks are not going to take this
    position seriously.
        Senator Scott. Thank you. Dr. Sabet, you talked about
    synthetic marijuana and the impact it has on the brain, some of
    the challenges that we have. I would love to hear a little bit
    more about that, and in my minute and 47 seconds I am going to
    ask you a compound question. The second part is can you explain
    your concerns about the impact of cartel activity in the United
    States as it relates to safe banking allowing for perhaps more
    fentanyl to flow through.
        Mr. Sabet. Yes, absolutely. So what I am concerned with is
    the active ingredient in marijuana, THC. Marijuana has hundreds
    of ingredients in it. It is a very complex plant. But we know
    that THC acts on receptors throughout the brain and the rest of
    our body that regulate a whole host of activity--coordination,
    reward, in memory. That is why marijuana can be addictive. In
    fact, one-in-three Americans who used in the last year,
    according to all the studies, fall under what we call a
    cannabis use disorder or addiction.
        And so when that THC enters that brain, especially as that
    brain is developing, you know, 25-, 30-years old--21 is
    political number. It is not a scientific number when we have
    age limits of 21. It is really 25 or even 30. And so it has the
    ability to really affect that person as that brain is growing,
    as that brain is developing.
        So now we have learned how to genetically breed marijuana
    to increase that THC to levels we could not have imagined 10-
    or 15-years ago. The fact that so much of the industry is
    selling these high potency concentrates that can be up to, they
    claim, 99.9 percent THC shatter, or these waxes, you know,
    these are products that did not exist before this industry
    started. It is really interesting. You know, not that what we
    had before was great either, obviously, with transnational
    organizations running the whole thing. But this legal industry
    has innovated in such a way that they have created kid-friendly
    products. The gummy bears, the candies, the concentrates, it
    never existed before legalization.
        The second part of your question about the underground
    market, you know, I really do worry about the ability of
    cartels and transnational criminal groups to take advantage.
    They are already taking advantage of the system. Illegal
    marijuana markets have grown in legal States, not shrunken.
    People might say, well, why is that? We legalized something.
    Why would we have that? We have that because the demand goes
    way up. It is normalized, commercialized, it is pushed on
    social media. That is why I wish Congress would actually
    recommence an anti-drug media campaign in social media for kids
    to understand the true facts. Not, you know, ``Reefer Madness''
    and scare tactics, but the true facts about marijuana, because
    this industry advertises.
        And so as the demand goes up, the Government cannot fill
    that demand. The Government has regulations, taxes, et cetera.
    The illegal market is very happy to come in much cheaper and
    not follow those regulations.
        In fact, as you know, cartels, they are making money from a
    diverse set of industries, not just one drug or one thing.
        Senator Scott. Wrap up.
        Mr. Sabet. Human trafficking, et cetera, it is all mixed
    together. So I would be concerned about the cartels.
        Senator Scott. Thank you.
        Chair Brown. Thank you, Senator Scott.
        Dr. Sabet, since I gave you 2 extra minutes at the
    beginning I would like a yes or no answer on this. Your
    organization states that removing criminal penalties for
    possession is a must as part of a comprehensive marijuana
    policy. Do you stand by that statement?
        Mr. Sabet. Absolutely.
        Chair Brown. OK. Thank you. Mr. Oyefeso, thank you for
    joining us. I want workers in small businesses in my State to
    be able to have access to financial services. I want small
    banks and credit unions to provide that in a way that is
    equitable and affordable. I am worried about large companies
    and Wall Street firms dominating this industry. We have made
    that very clear to supporters of this bill.
        Do you share that concern? Why is it good for workers and
    small businesses to have a fair and competitive market?
        Mr. Oyefeso. Simple answer, yes, I do share that concern. A
    competitive market allows wages to grow. If there is heavy
    consolidation in the industry you will end up with a few
    companies able to regulate and control the salaries, the wages,
    and the benefits of all of these workers and the pricing of the
    products for consumers. So having this bill pass allows more
    companies to open up and allows workers the ability to
    negotiate a better wage and benefits package.
        Chair Brown. Thank you. Borrowers, especially first-time
    home buyers and veterans, use federally backed loans from
    programs from the VA and FHA that finance their homes. Talk
    about the barriers of employees that legal cannabis businesses
    face when they are trying to buy a home. You mentioned that
    just briefly. Expand that a bit. How does this bill help
    address those barriers?
        Mr. Oyefeso. I will use an example of Miranda Beck, who
    works in a Starbuds in Maryland, in Baltimore, Maryland. Her
    and her colleagues get paid in cash, and beyond the risk of
    being robbed when they are getting paid, they also have to now
    provide proof of employment. But they are being paid in cash,
    so they do not have proof of employment. So when you are trying
    to get a home and/or rent an apartment, whichever it may be,
    you cannot go to a mortgage lender and say, ``Here is my proof
    of employment. Here is my salary. Here is my W-2,'' or to a
    landlord and say, ``Here is my proof of employment. Please rent
    me the apartment.''
        So they are completely at a disadvantage in moving up the
    ladder of life just because the industry is legal in the State
    of Maryland, but it is not federally legal, and the employer is
    not fully banked. So while there are 700 to 800 banks that do
    business throughout the country, cannabis is legal in just
    about every State in the union, and 700 to 800 is minuscule
    when you are a worker sitting in the heart of Baltimore, in
    Brooklyn, New York, in Cleveland, Ohio, if you have to travel
    10, 12 miles to reach your bank.
        Chair Brown. Thank you. Ms. Packer, you spent 5 years as a
    cannabis regulator. What were the challenges that the
    Government faced when it came to banking, and what about small
    businesses?
        Ms. Packer. Thank you, Chairman Brown. I described a
    situation earlier where even trying to create small business
    assistance for our city's Social Equity Program was a
    challenge. But even things like the collection of taxes and
    fees and other regulatory
    responsibilities are extraordinarily complicated by an abnormal
    banking environment.
        I will give you an example of what was happening in the
    city of Los Angeles. To handle the cash-intensive nature of the
    cannabis industry, the city of Los Angeles had to have a
    specific Cannabis Cash Collection Unit at our City Hall. And
    anyone who wanted to make an appointment over $1,000 had to do
    so in person. This was a headache for small businesses, having
    to come in person to make just regular tax payments, regular
    fee payments, and for the city of Los Angeles this was not a
    small issue. In fiscal year 2022, the city of Los Angeles
    accepted over $26.3 million in cash.
        Chair Brown. Talk to me about community-based institutions,
    including MDIs and CDFIs. How are they important to promote
    fairness in cannabis banking and in the broader industry?
        Ms. Packer. I appreciate that there has been an intention
    to include CDFIs and MDIs in the 2023 version of SAFE. It is
    critically important for these particular institutions to be
    able to have access to the safe harbor. These are institutions
    that regularly provide financial services to Black and Brown
    communities. They are specifically serving communities that are
    designated as socially vulnerable and prone to economic health
    and safety challenge. And given that they are literally serving
    the same communities that were targeted by the war on drugs, it
    is essential for them to receive this safe harbor and to be
    able to participate in providing services.
        Chair Brown. Thank you.
        Senator Daines, of Montana, is recognized.
        Senator Daines. Chairman Brown, thank you. Before I get
    started I want to recognize Congressman Joyce, a colleague on
    the House side, has been instrumental in getting this done. I
    am grateful for his leadership and a big thank you.
        I would also like to ask unanimous consent to submit a few
    statements and letters of support into the record, if I could,
    Mr. Chairman.
        Chair Brown. Without objection, so ordered.
        Senator Daines. Thank you. I would also like to begin my
    time by addressing the human factor of this equation. Mr.
    Oyefeso, I think you are probably as good a witness on this as
    any, on this particular topic, because in your testimony you
    touched upon the physical dangers, including being robbed at
    gunpoint. Cannabis workers are facing danger because they and
    their employer are forced to operate primarily in cash under
    the current system.
        From what you have heard from your members, is the
    situation on the ground getting safer or more dangerous for
    cannabis employees and the public?
        Mr. Oyefeso. It is not safer. It is getting more dangerous,
    because people, as we have heard, more and more people are
    going to these stores, so criminals now realize there are more
    and more possibilities of robbing large amounts of cash. So now
    workers, if your dispensary does not have a security team, you
    know, people with guns standing there, you have to worry that
    when you are closing at night are people going to rush in and
    rob you.
        We have had members who, you know, if you are getting paid
    in cash, if a former worker knows the payday and you are
    getting paid in cash, you are going home, and we have members
    who are pharmacists at cannabis dispensaries who make $68 an
    hour. So these are good jobs when they are organized, and they
    can go home with $2,000 and worry about, I am holding $2,000
    cash in my pocket, where the rest of us get paid and it is
    direct deposited into our banks. So there is your weekly take-
    home that you could lose in a night. There is your life you can
    lose. You go to work, you have a good job, you want to go home
    to your family, and because it is not banked you have that risk
    every night.
        Senator Daines. I mentioned in my own testimony, to think
    about even the employees of these businesses, when you think
    about the other businesses that serve these businesses, the
    tradesmen and women. I mean, if they are going to fix a leaky
    pipe or fix a wire, that transaction is going to occur in cash.
    So the subcontractors that might be trying to do some work with
    these legal businesses are also put at risk. So thank you for
    your testimony.
        I would like to switch gears and touch on the current
    cannabis landscape across the United States. Over the past
    decade, 22 States have legalized the medical use of cannabis,
    which 20 of these States have taken the additional step of
    legalizing recreational use, and that includes my home State of
    Montana.
        Cannabis use is decriminalized in some form in 47 States
    and the District of Columbia. While I personally voted against
    legalizing recreational use--and here is kind of a part of
    politics--I won my re-election 55 to 45 in Montana, while the
    ballot initiative passed 57 to 43. I recognize and appreciate
    the reality that we face, and that reality is a legal patchwork
    that just does not work for banks, for businesses, or for law
    enforcement.
        Mr. Sabet, has any State that has legalized cannabis,
    either medicinally or recreationally, taken any steps to
    recriminalize it?
        Mr. Sabet. Yes. Actually, in 1990, when Alaska
    decriminalized marijuana, they recriminalized it soon after
    because of the negative effects. We have also seen lately
    States trying to get a handle on THC content and trying to
    limit that. But with this industry and the lobbyists and the
    people behind it, it is very difficult to do that. Because like
    in your State, as you know, Senator, the pro side is
    outspending the teachers and the parents something like 20 to
    1, so it is very difficult to do that.
        I will say----
        Senator Daines. You used the example of Alaska. What is the
    status of----
        Mr. Sabet. Well, then Alaska, after spending $5 million,
    legalized in 2012----
        Senator Daines. I just want to make sure you paint the
    accurate picture. It is a fact what you stated. But I think we
    really want to state the truth and the whole picture.
        Mr. Sabet. Oh yeah, sure.
        Senator Daines. They also then--I mean, maybe we just want
    to put that in the record as well, please.
        Mr. Sabet. Yes. So what has happened on the local level,
    though, I think is very important. The majority of localities
    in most legal States have outright banned the sales of
    marijuana. So you have the majority--not all legal States have
    done that, but the vast majority of legal States, where they
    voted for it State-wise, at the local community level, when
    people are asked, ``Do you want a marijuana store in your Main
    Street, or whatever, in your community,'' according to the
    League of Cities and many other sources, we know that, for
    example--Ms. Packer would know better about California. It used
    to be 70-some percent. I do not know what it is now. But the
    vast majority of these localities have actually voted against
    that.
        Senator Daines. Mr. Sabet, in your testimony you cite an
    article from Bloomberg suggesting that cannabis businesses have
    widespread access to banking services. However, I pointed out
    in my testimony that only 9 percent of financial institutions
    offer banking services, and we heard the totality. The article
    you cite also states that, and I quote, ``such estimates may
    overstate the real number, many say, because they would include
    institutions that have only temporarily worked with cannabis
    companies,'' end quote.
        My question is this. Do you have any data that would
    suggest that cannabis businesses have easy and widespread
    access to financial services? Because the story here from both
    businesses and then financial institutions is quite different.
        Chair Brown. Please be very brief.
        Mr. Sabet. So the two points of data would be the U.S.
    Department of Treasury, and I think it is in my statement that
    talks about it. The second one would be the on-the-record
    statements of regulatory bodies in States like Colorado that
    talk about the local banks and the co-ops, et cetera.
        Senator Daines. OK. Thank you.
        Chair Brown. Thank you, Senator Daines.
        Senator Cortez Masto, of Nevada, is recognized.
        Senator Cortez Masto. Thank you, Mr. Chairman, and thank
    you and the Ranking Member for having this hearing. It is such
    an important bill that I hope we have the ability to pass in a
    bipartisan way.
        Let me start with, is it Mr. Oyefeso, and Ms. Packer. The
    Secure and Fair Enforcement Act, or the SAFE Act, as we are all
    talking about today, which finally would allow cannabis
    businesses full access to the U.S. banking center. Right now
    legitimate cannabis businesses all over Nevada are hurting
    because they cannot access traditional banking. My office heard
    from one business owner in Las Vegas who said that the lack of
    access to banking creates logistical headaches and puts her and
    her employees at risk. Her business has to deposit large
    amounts of cash at local banks, often at more than one bank in
    the same day because of cash deposit limits. This is burdensome
    and, quite frankly, dangerous.
        Last year, after one of those deposit runs, this business
    owner's car was broken into, and fearing that whoever had
    broken into her car now knew from her bank deposit slips that
    she carried large amounts of cash, her coworkers bought her a
    taser, and she keeps it by her bed at night to feel safe.
        Now this is outrageous. Banks already accept the money that
    legitimate marijuana businesses pay contractors and security
    firms, and it is just common sense that they should serve the
    actual businesses too.
        So there has been a lot of support for the SAFE Act,
    bipartisan support. It passed out of the House of
    Representatives seven times. Thirty-eight State and territory
    attorneys general have called for SAFE to pass.
        So let me just ask this question. We had nearly $700
    million in total sales last year in Nevada. What are the
    consequences for owners and employees operating as mostly an
    all-cash business? And Mr. Oyefeso, let me start with you.
        Mr. Oyefeso. The simple answer is death. In an industry
    that has $700 million in cash in Nevada, we have members in
    your State in the cannabis industry. It is a constant fear of
    if I am depositing money, what happens? If I am going home with
    cash from my pay period, what happens to me? You have a steady
    flow of customers. I have been to dispensaries in Nevada. You
    have a steady flow of customers, whether it is people who live
    there, coming from different parts, or visitors. And everyone
    knows you are dealing in cash, so there is a constant worry of
    what you are carrying, what you are leaving with.
        And you also have the problem for delivery workers. In some
    States, you can deliver cannabis. So now you have an individual
    who is making deliveries, who everyone knows is carrying cash.
    And, you know, I am a New Yorker. Delivery drivers always had
    to worry in the 1980s and 1990s about cash. Now if you are
    delivering food it is done through one of the apps, but for
    cannabis it is not. So you worry about I am just doing a run
    and someone could rob me or hurt me.
        Senator Cortez Masto. So Nevada has the second most sales
    per capita, just behind Colorado, and this is a concern I hear
    from businesses all the time. Not only are they concerned about
    their safety, but the concern about their workers, the concern
    at the end of the day also that a lot of their overhead goes
    into security, just because they are an all-cash business.
        Ms. Packer, what would be the long-term consequences for
    businesses and workers of not passing the SAFE Act, that we
    have not talked about already?
        Ms. Packer. Yes. I think what has been articulated by many
    businesses is that they literally just cannot afford to
    continue to pay the high fees, to be at risk; and that is part
    of the reason why the organizations that I work with have been
    advocating for fair access. It is important that as we move
    this bill forward that we do not continue to have categories of
    folks who are going to be dealing in just cash. There is a real
    opportunity to ensure that we are bringing everyone into the
    banking system that provides oversight as a regulator. That is
    critically important.
        For the workers, in particular, there is a real opportunity
    for us to ensure that they are just treated like normal
    businesses. There is a real concern that we are going to allow
    stigma to continue in this space as well.
        Senator Cortez Masto. I appreciate that. Let me ask this
    question, and briefly. I only have about 16 seconds left here.
    Many business owners, parents, and members of local law
    enforcement have expressed concerns about the proliferation of
    the gray market. There is no doubt tied to the cost consumers
    pay for cannabis is a result of the exorbitant fees and unusual
    expenses businesses have to pay to function, like hiring
    armored cars, that I talked about. But can you talk to me about
    the gray market? Can you define that for me?
        Ms. Packer. Yes, and I appreciate you asking me the
    question because I have had conversations with folks about what
    we use as the term. I encourage folks not to use the term
    ``black market.'' I know we have heard folks use this term
    before. We do not want to equate ``black'' with illegal.
        But part of the reality is that this increases a safety
    concern. There are businesses in the city of Los Angeles, for
    example, particularly I am talking specifically about
    unlicensed, unregulated businesses, and that is how I would
    define them. They are outside of the regulatory scope. But they
    are going to continue to engage in cash. And for some of the
    businesses that we engage with in the city of Los Angeles is
    primary law enforcement, you had illegal cannabis businesses
    that were looking to try and set up and rob legal cannabis
    businesses.
        Senator Cortez Masto. Thank you. I notice my time is up.
    Thank you, Mr. Chairman.
        Chair Brown. Thank you, Senator Cortez Masto.
        Senator Warren, of Massachusetts, is recognized.
        Senator Warren. Thank you, Mr. Chairman.
        So I think the SAFE Banking Act is a long-overdue step to
    help legal cannabis businesses in Massachusetts and all across
    the country be able, finally, to open bank accounts, accept
    credit cards, and access other basic banking services.
    Businesses need these services to operate safely and
    successfully, and workers need the protection from safety risks
    of working in cash-only businesses.
        So I look forward to working with my colleagues to pass
    this bill, but it cannot be the end of our work on marijuana
    policy. That is because as long as marijuana remains
    criminalized federally, we are not fully fixing the problem. If
    people can still get busted for purchasing marijuana, many
    banks will find it too risky to serve legal cannabis
    businesses, no matter whether we tell them it is technically
    OK.
        Now I pushed the Administration to use its administrative
    authority to deschedule marijuana. Like my friend and neighbor,
    Dr. Sabet, said in his opening testimony, no one should be
    incarcerated just because they got caught with a joint. The
    White House has directed HHS and DOJ to review how marijuana is
    scheduled. That will affect research going forward and what we
    come to understand about it. But we need to see those agencies
    act.
        Ms. Packer, you have years of experience in the cannabis
    industry, both as a regulator and as a drug reform advocate.
    Would fully decriminalizing marijuana at the Federal level help
    ensure that small businesses get full access to safe, formal
    financial services?
        Ms. Packer. Thank you, Senator Warren. I appreciate all the
    work you are doing to push the Administration to take further
    acts. Yes, it would certainly help. The reality is that even
    with the safe harbor, many financial institutions are likely to
    continue to view the industry as risky, due to its Schedule I
    status. And even if cannabis was rescheduled, for example, to
    Schedule V, the small businesses and workers that we are
    talking about today, they would still be criminalized.
        So I want to just emphasize this. The only way to eliminate
    the criminality of small businesses and workers is to
    completely remove cannabis from the Controlled Substances
    Schedule. We want to deschedule, not reschedule.
        Senator Warren. I hear your point, and I recognize that
    descheduling not only helps ensure that small cannabis
    businesses have access to safe, formal financial services, but
    it also deals with a bigger problem, and that is while the SAFE
    Banking Act is a critical step on cannabis reform, we risk
    creating a system in which banks enjoy a safe harbor from
    prosecution for financing marijuana businesses, while thousands
    of people remain incarcerated for marijuana activities.
        In my view, the best solution is full Federal
    decriminalization. But we should also make sure that updates to
    our banking laws take equity into account. For example, when
    banks consider whether to serve a cannabis business, they
    consider the red flags that are laid out in the 2014 FinCEN
    guidance. One of those red flags is whether the business' owner
    has a drug-related conviction, which could include a conviction
    for something like marijuana purchase.
        So even as we try to move away from penalizing nonviolent
    marijuana activity, a penalty for marijuana activity is baked
    into lending decisions. And we know that Black Americans are
    almost four times more likely than White Americans to be
    arrested for marijuana possession.
        So Ms. Packer, would making it clear that financial
    institutions should not consider a marijuana criminal record an
    automatic red flag make our banking system more equitable?
        Ms. Packer. Yes, it absolutely would. The reality is that
    we are in a situation today, it is no longer 2014, right? Since
    2014, we have had 25 States--we are at a point now where have
    25 States that have passed laws to expunge records, provide
    folks second chances. We are also in a situation where we have
    15 States that include people with past cannabis criminal
    records, affirmatively allow these people to participate. We do
    not want to sit here and tell States either that their State
    policies do not matter and that they cannot pick and choose who
    should be a part of their market.
        Senator Warren. That is actually a very good point. You
    know, the SAFE Banking Act requires FinCEN to update its
    guidance when this bill becomes law, and this change should be
    at the top of their list.
        We need a comprehensive, all-of-the-above approach to
    cannabis reform that includes SAFE banking as well as
    decriminalization, pardoning and expungement of criminal
    records and other steps to begin to address decades of harmful
    and racially discriminatory cannabis laws.
        Thank you, Mr. Chairman.
        Chair Brown. Thank you, Senator Warren.
        Senator Fetterman, of Pennsylvania, is recognized.
        Senator Fetterman. Thank you, Mr. Chairman.
        Mr. Sabet, as far as I understand Canada has now made
    marijuana legal. Is it safe to say that it has not slid into
    anarchy?
        Mr. Sabet. It would be safe to say that. In fact, I spend a
    lot of my time in British Columbia, and so I could say that. It
    is a beautiful place. But no one predicted it would slide into
    anarchy. It has just seen some increases in use. It has seen
    some DUI issues. It has seen the doctors of Ontario and Quebec
    call for more awareness on high-potency THC, given emergency
    room admissions.
        Senator Fetterman. So in other words, it is OK.
        Mr. Sabet. Well, that part is not OK. That part is not OK.
    It has not slid into anarchy. You are right.
        Senator Fetterman. And then let me just say with respect,
    you know, so really, I know obviously you oppose legalizing
    marijuana, and I presume it is because you believe that it is
    dangerous, and it could result in a lot of deaths. Right?
        Mr. Sabet. That is one reason.
        Senator Fetterman. Yes. So how many annual deaths for
    alcohol use?
        Mr. Sabet. There are about 120,000 annual deaths from
    alcohol.
        Senator Fetterman. One-hundred-twenty thousand. We agree
    with that. That is actually about right. How many deaths do
    cigarettes have in America every year?
        Mr. Sabet. Still about 400-some-thousand. Our legal drugs
    kill many more people than our illegal ones, partly because
    they are fueled by a for-profit, addictive industry, that I
    know, Mr. Chairman, I appreciate your work on this, fighting
    Big Tobacco for so long. Yes, our legal drugs kill a lot of
    people because they are advertised and promoted in a system
    that----
        Senator Fetterman. So in other words, alcohol and tobacco
    should be made illegal then.
        Mr. Sabet. Well, we are stuck with them because of their
    cultural, you know, where they have been in our----
        Senator Fetterman. It is addictive and there are a lot of
    profits on that. And then also, another question is how many
    people have died of aspirin?
        Mr. Sabet. A few thousand a year, maybe.
        Senator Fetterman. Yes. OK, so you were just talking about
    THC earlier. So many people have overdosed from THC death?
        Mr. Sabet. Well, overdose--there is a difference between
    overdose and overdose death. Overdose, probably hundreds of
    thousands of overdoses, not necessarily resulting in death.
    Tobacco does not provide an overdose----
        Senator Fetterman. So the answer is zero.
        Mr. Sabet. Tobacco is also zero. Yes, Senator. Tobacco is
    also zero overdose.
        Senator Fetterman. Zero, and that is my point.
        Mr. Sabet. But thousands of deaths from----
        Senator Fetterman. Sir, sir. See, you talked about THC,
    saying that this is not my grandpa's weed or whatever. But from
    my standpoint, this is like, do you know what grain alcohol is?
        Mr. Sabet. Mm-hmm.
        Senator Fetterman. Yes. Because it is sold in Pennsylvania
    as alcohol at a State store. And I do know anyone that walks in
    and is, ``Oh, my God, I ended up with grain alcohol instead of
    this bottle of red wine.'' You know, people can understand that
    as well, too, and that seems like it. And I do not use
    marijuana. You know, it could be made legal tomorrow in
    Pennsylvania, and I am not going to. And I am not going to use
    tobacco. And I am just saying, I support the SAFE Act, but if
    we just made it legal, we do not have this special safe beer,
    you know, Act or anything. We just need to make it legal in
    that.
        So what I am saying to you, and I am going to save you the
    last minute here, is that I just believe it is freedom. I
    believe it is a freedom issue for people, and I believe that it
    is making the legality--and I have been given hundreds and
    hundreds of people pardons because of having their lives ruined
    by having a B.S. charge. And that is what it is about to me. So
    you, sir.
        Mr. Sabet. Thank you, Senator Fetterman. I appreciate the
    time. I agree with you on pardons and expungement. I agree with
    you on removing criminal penalties. I wish we could make a
    distinction between decriminalization and the commercialization
    and legalization.
        Senator Fetterman. Honestly, I really am glad to finally
    get together.
        Mr. Sabet. No, absolutely. And I also agree with your logic
    that, you know, we do not have a ``SAFE Beer Act'', so let's
    have an honest debate. We might disagree at the end of the day,
    but let's have an honest debate on the legalization of drugs.
    Because we are seeing States legalize psychedelics now. There
    is talk about heroin and cocaine. Are we going to have a ``SAFE
    Psychedelics Act'', a ``SAFE Cocaine or Heroin Act'', a ``SAFE
    Fentanyl Act''? I mean, let's have an honest debate on the
    merits as opposed to some giveaway for banks. We might
    disagree, Senator Fetterman, but we can have that honest debate
    and conversation. So I appreciate that.
        I will also say that I think we need to talk--we have
    talked about the human toll of the industry. We need to talk
    about the human toll of the use of this superstrength THC. The
    suicides that we are seeing, the schizophrenia and psychosis we
    are documenting daily, where scientists are on this. The
    driving crashes. We work with a woman named Corinne LaMarca in
    your State of Ohio, Mr. Chairman, whose daughter was killed by
    someone driving high on marijuana, a 19-year-old daughter. You
    know, that is a human story too.
        And so we should not lock people up. We should not give
    criminal records. We should not have an incarceration-focused
    war on drugs. But at the same time I think we are going to this
    other extreme of acceptance over normalization, and I think
    people are getting hurt as a result.
        Chair Brown. Thank you, Senator Fetterman.
        Senator Smith, of Minnesota.
        Senator Smith. Thank you, Mr. Chair, and thank you, Senator
    Fetterman, for those questions. I think you are touching on
    something that is very important, which is kind of the question
    of freedom.
        I would like to draw out another piece here which is how
    the Federal prohibition on cannabis is a policy that has
    contributed to mass incarceration and over-policing, that it
    has not affected all communities the same. It has
    disproportionately affected Black and Brown communities. So we
    have a lot of work ahead of us to right those wrongs, and I
    believe that this includes decriminalizing marijuana and then
    expunging convictions. But we also have an important role to
    play in our corner of this work, in this Committee, with the
    SAFE Banking Act.
        So Ms. Packer, let me ask you, the SAFE Banking Act has, in
    the latest version, explicitly protects community development
    financial institutions and minority depository institutions.
    Can you just talk to us about how this could help expand
    opportunities for communities that have been disproportionately
    harmed by the war on cannabis?
        Ms. Packer. Thank you, Senator Smith. CDFIs and MDIs
    disproportionately lend to Black and Brown communities. CDFIs,
    in particular, are folks who regularly lend to small business,
    to do agriculture, to do commercial real estate, and these are
    the exact sectors that the cannabis industry and hemp industry
    need. So they are serving the undeserved.
        Senator Smith. Yes. Thank you for that. I completely agree.
    And I am just grateful for the Chair for the timeliness of this
    hearing and convening this hearing.
        Minnesota is on the cusp of legalizing recreational
    cannabis, and this is an exciting development, opportunity for
    small businesses and others. And the reality is that cannabis
    shops in Minnesota will effectively operate in the shadows so
    long as State and Federal laws are out of sync, right?
        So for Mr. Oyefeso, could you talk about the challenges
    that this presents for workers at cannabis businesses and their
    employers in States like Minnesota that are moving to legalize.
    What impact does that have on them?
        Mr. Oyefeso. One of the impacts is, as Mr. Sabet brought
    up, people prescribing to pregnant women. UFCW has created a
    training program with employers, but we cannot expand it
    without SAFE. So when you pass SAFE you can expand a training
    program that allows workers and employers to properly train
    workers and brings them out of poorly prescribing different
    potency levels to the wrong person. That is a big part of it,
    being able to educate workers, but you have to have the funds
    and the ability to build this in.
        Senator Smith. Right. Thank you. And Ms. Packer, how does
    this sort of, you know, one foot in each world regulatory
    environment that you have with States legalizing and then these
    Federal laws, how does that affect, you know, people who are
    cannabis consumers?
        Ms. Packer. I think part of it is that it just causes
    confusion. I think that there is a lot of confusion amongst
    consumers, and folks are not necessarily always able to tell
    licensed and regulated businesses from unlicensed businesses.
    And the same concerns that folks have about, you know, workers
    and the space consumers are entering, these places as well
    where cash is on hand. So I think the concern extends to them
    as well.
        Senator Smith. Mm-hmm. You know, both the Chair and I serve
    on the Agriculture Committee as well as the Banking and Housing
    Committee, and in 2018, the farm bill legalized hemp
    cultivation for commercial use. You know, licensed growers went
    up, but then they have been coming down. It was seen as a big
    opportunity in Minnesota and other States around the country,
    and there are a lot of reasons for that.
        But one constant concern I have heard from Minnesota
    growers has been a lack of access to basic banking. It is tough
    to get loans or to access payment processing. So Ms. Packer,
    have you heard similar concerns about this from farmers, and
    how can this Committee support hemp growers to help them grow
    their business and diversify their business?
        Ms. Packer. Thank you. In the city of Los Angeles we were
    working primarily with folks who were doing indoor cultivation,
    but the reality is that this is an issue across the supply
    chain. Whether it is cultivators, manufacturers, distributors,
    folks who are engaged in retail sales, they are all similarly
    plagued by a lack of fair access to banking.
        Senator Smith. Thank you. Thanks very much. Thank you, Mr.
    Chair.
        Chair Brown. Thank you, Senator Smith.
        Thanks to the four witnesses that joined us.
        Senators who wish to submit questions for the record, those
    questions are due 1 week from today, Thursday, May 18th. For
    the witnesses, please, you have 45 days to respond to any
    questions.
        Thank you again. The hearing is adjourned.
        [Whereupon, at 11:37 a.m., the hearing was adjourned.]
        [Prepared statements, responses to written questions, and
    additional material supplied for the record follow:]
                   PREPARED STATEMENT OF CHAIR SHERROD BROWN
        Thank you to Senators Merkley and Daines for being here to testify
    and welcome to our other witnesses. And thank you to Ranking Member
    Scott for working with me on this hearing.
        Today the cannabis landscape looks far different than it did even a
    few short years ago.
        Cannabis has been legalized or decriminalized in almost every
    State. States and localities have established licensing and social
    equity programs to ensure that small businesses and communities
    impacted by the war on drugs are part of the growing legal cannabis
    industry.
        Today, we will hear about the challenges that small businesses and
    workers continue to face, and how we can empower and protect workers,
    provide stronger consumer and small business protections, and ensure
    fair and equitable access to financial services--all while making sure
    that our communities stay safe.
        Banking is critical for small cannabis businesses, who already face
    hurdles getting their business off the ground. Like any business, they
    need to apply for licenses, raise capital.
        But that's hard to do when you don't have a bank account, or if you
    do, one that might come with lots of fees.
        Without full access to the banking and payments system, legal
    cannabis businesses are forced to operate in the shadows.
        They can't access SBA loans, and know that even if they try to
    apply for a bank loan, they might go through all the costs and effort,
    only to be denied. So many small businesses rely on friends and family
    for funding.
        They deal with lots of cash, spend precious time trying to find a
    work-around, or hire expensive third-party service providers that take
    a hefty cut of their slim profits.
        This puts a robbery target on the backs of workers, and can make it
    harder to combat money laundering.
        There are also thousands of workers who can't prove their income to
    get a mortgage or a car loan, or keep a personal bank account, even
    though their paychecks come from a business that is perfectly legal in
    their State.
        Many of these workers are represented by unions like the UFCW and
    the International Brotherhood of Teamsters, which are fighting to make
    sure that their workers have more power in the workplace, in an
    industry where their physical safety is often at risk.
        The effects of this patchwork system go beyond just the cannabis
    industry.
        Sheet metal and air conditioning contractors build service retail
    locations and other facilities.
        Lawn care and gardening companies, like Scotts Miracle-Gro in Ohio,
    sell materials and equipment. They want to continue their businesses
    and serve their customers, and they don't want to worry that it will
    put their bank accounts at risk.
        While small businesses and workers deal with these challenges, the
    large cannabis companies are the ones dominating the market.
        They have ready access to private capital and are taking advantage
    of their workers with unfair labor practices to maximize profits. I
    stand by the workers who are actively fighting for higher wages and
    safer workplaces.
        We don't want the cannabis industry to become like Big Tobacco--
    concentrating industry power in just a few giant players, hurting
    workers and pushing out thousands of small businesses, which are more
    likely to be owned by Black and Brown entrepreneurs, women, and
    veterans.
        We want small banks and credit unions, MDIs, and CDFIs to be able
    to serve small businesses and their workers, and level the playing
    field in an industry that is increasingly concentrated.
        Community banks and credit unions in my State want to serve the
    legal cannabis industries in their communities, and they want to rest
    assured that they can continue to bank their existing customers.
        Banks and credit unions shouldn't have to pick and choose which
    services they can offer to customers that happen to earn their income
    from a cannabis business.
        People in the cannabis industry should be able to have the same
    types of personal, commercial, and mortgage loans that any other
    customer can have, with the same protections and without additional
    costs or fees.
        And as we all know, the over-criminalization of marijuana has
    disproportionately hurt communities of color and indigenous
    communities.
        We have a long way to go to right those wrongs. We can start by
    ensuring that members of these communities not only benefit from, but
    also lead, the growth of the legal cannabis industry.
        MDIs and CDFIs can help reach these communities that are often
    overlooked--or worse, preyed upon--by other financial institutions. And
    people with prior marijuana convictions--especially in States where it
    is now legal--shouldn't be barred from participating in our economy,
    whether it's renting a home or finding a good-paying job.
        We all want safe communities and a safe banking system.
        As we all know after the three recent bank failures sparked by a
    panic-induced run, banks must manage the risks of their business.
        And they need to understand that failure to meet stakeholder
    expectations can have dire consequences for their customers.
        We must not weaken regulators' ability to protect consumers and the
    banking system from these risks.
        Financial institutions also play an important role in monitoring
    our financial system for fraud, money laundering, and other illegal
    activities.
        We need to ensure that workers and small businesses in the cannabis
    industry can access banking, while maintaining our robust anti-money
    laundering framework.
        I have heard from law enforcement officials who say that expanding
    banking access to cannabis businesses can help improve public safety,
    and direct resources towards truly criminal activity.
        Cannabis banking is of course just one part of the conversation on
    marijuana policy.
        People shouldn't be thrown in jail for a product that others are
    legally profiting from. In the past, we have been able to work together
    on a bipartisan basis to give those with prior convictions a second
    chance.
        Everyone--including our veterans--should have access to the
    medicine they need to care for themselves and their families.
        And if we truly care about public health, we should consider more
    medical and scientific research on this topic, so that we understand
    all of the impacts.
        There is more work to be done to make sure everyone can participate
    in the banking system and the legal cannabis economy in a fair, safe,
    and equitable way. I am glad we are building on the progress we have
    made over the years, and I look forward to continuing the conversation
    with our witnesses.
                                     ______

                    PREPARED STATEMENT OF SENATOR TIM SCOTT
        Thank you to both of you for being here with us today--particularly
    to Senator Daines for your hard work and dedication on this topic for a
    number of years. As well as acknowledging both Senators Cramer and
    Lummis for their hard work on this, as well, on such an important
    topic.
        Each one of us on this Committee represents different States with
    different marijuana laws, and I understand that some of us may be in
    very different places when it comes to the legality of marijuana. In my
    home State of South Carolina, marijuana is largely still illegal, and
    I, myself, have concerns with it.
        And at the Federal level, marijuana is considered a Schedule I
    drug, which means that the possession, distribution, or sale of
    marijuana and other marijuana-derived products is illegal and that
    proceeds from marijuana-related businesses are subject to U.S. anti-
    money laundering laws.
        The Department of Justice and national law enforcement groups have
    expressed concerns that [the] SAFE Banking Act could create loopholes
    in our money-laundering laws making it harder to catch criminals that
    traffic weapons, fentanyl, and even people--much harder, which is a
    consequence that we must eliminate if this bill is to become law.
        However, there are some States that have legalized marijuana, and
    now, we have legal State-based marijuana-related businesses throughout
    the country that depend on a relationship with their bank or credit
    union. And as a former small business owner, I understand and
    appreciate the importance of having that relationship with your
    financial institution. A banking relationship is crucial to providing
    safety and stability for a company--both employees and the customers it
    serves.
        That is why I am looking forward to hearing from our second panel
    of witnesses on how these businesses operate, the complications faced
    by these businesses, and how the safe harbor provided in the SAFE
    Banking Act would work in practice or if more is needed to ensure
    compliance.
        Finally, if we are going to have a conversation about SAFE Banking
    and banking a product that is illegal at the Federal level, then we
    must discuss the importance of banking all industries. In the past few
    years, we have seen certain financial institutions cave to political
    pressures and take actions to ``de-bank'' certain legal industries,
    such as firearms and oil and gas entities, due to the wild progressive
    nature of the radical Left and their agenda. These same institutions
    that are asking us to take a second look at the SAFE Banking Act are
    frankly standing in the way of banking legal entities today. I find
    that disappointing and quite perplexing. Congress has a responsibility
    to ensure that all legal industries have access to financial
    institutions and services. I understand that SAFE Banking, as drafted,
    currently contains a provision to ensure that legal industries are
    banked. De-banking legal industries is inappropriate, and I look
    forward to hearing more about that part of the legislation as we
    continue the discussion today. I hope today's hearing lends itself to a
    thoughtful debate on this issue.
                                     ______

                   PREPARED STATEMENT OF SENATOR JEFF MERKLEY
        Chairman Brown, Ranking Member Scott, Members of the Committee,
    thank you for holding this critical hearing today on our SAFE Banking
    Act. And thank you for the invitation to come and testify on an effort
    I began over 8 years ago and have partnered with bipartisan colleagues,
    including Senators Gardner and now Daines, to advance. And, of course,
    I'd like to thank Chairman Brown for his partnership on this
    legislation and for months of collaboration to get us here today.
        At this moment, more than half of all States across our Nation have
    some form of legalized cannabis--37 States, plus DC have it for
    medicinal purposes while 21 have made it legal for recreational use.
        Today, legalized cannabis is an industry that supports more than
    428,000 jobs \1\ and accounted for over $25 billion in sales in 2021.
    In my home State of Oregon, we had nearly $1 billion in sales last
    year, with the taxes generated from those sales going to help fund our
    schools, mental health and substance abuse treatment programs, as well
    as law enforcement and city and county needs.
    ---------------------------------------------------------------------------
         \1\ https://flowhub.com/cannabis-industry-statistics#
    ---------------------------------------------------------------------------
        But our Federal law has not kept pace with Americans' changing
    attitudes towards cannabis, nor with the changing laws at the State and
    local level. That refusal to change denied these legitimate businesses
    the ability to access the same basic necessities as every other
    business--whether it's access to banking and credit card accounts,
    payroll services and more--because depository institutions and credit
    unions, worried they may be threatened with criminal prosecution under
    Federal law, have largely refused to work with this industry.
        This has forced nearly three-quarters of legitimate cannabis
    businesses to operate entirely in cash. The few financial institutions
    that do work with cannabis businesses charge hefty fees because of the
    legal risk and added layers of compliance. And this cash-only
    requirement trickles down far beyond just the cannabis retailers and
    growers. It effects the subcontractors who can only be paid in cash;
    the fertilizer providers and the seed sellers--practically any kind of
    small business associated in any way with this industry--all of whom
    can only carry out transactions in cash. It effects the employees of
    these legal cannabis businesses who can't be paid by check or direct
    deposit, meaning they have to walk around with wallets full of cash
    worried that they'll be a target for criminals on payday.
        Forcing legal business to operate in an entirely cash economy is
    terrible for accountability, but great for crime as it has left these
    businesses, and all those connected to them, open to violent crime,
    money laundering, theft, tax fraud and more.
        There's no national database to compile the statistics of incidents
    connected to these businesses. But over the last 12 months, we've seen
    at least 129 robberies of Oregon cannabis businesses. \2\ An unofficial
    tracker in the greater Seattle area showed that robberies of Washington
    cannabis retailers reached a 10-year high in 2022. A worker at a San
    Francisco dispensary was kidnapped in an armed robbery where $30,000 in
    cash was stolen back in February. \3\ If these businesses had the
    ability to accept debit cards and credit cards, and use the same
    systems to pay their taxes and payrolls as every other business uses in
    this day of technology it is indisputable the number of violent
    robberies would be far smaller.
    ---------------------------------------------------------------------------
         \2\ https://www.oregon.gov/olcc/marijuana/Pages/marijuana-
    thefts.aspx
         \3\ https://sfstandard.com/criminal-justice/armed-kidnappers-
    target-cannabis-shop-run-by-anti-violence-leader/
    ---------------------------------------------------------------------------
        The Secure and Fair Enforcement Banking Act--or SAFE Banking Act--
    that Senator Daines and I have introduced and led together--would
    ensure that these legitimate businesses, operating in compliance with
    State cannabis laws in those States where citizens have said they want
    legal and medical cannabis, will have access to all of the same
    financial services as every other business. And those financial
    institutions will be protected against prosecution or asset forfeiture
    primarily for providing services to a State-sanctioned cannabis-related
    business.
        To be clear, banks will not be forced to provide services to these
    businesses, it simply creates a safe space for both the financial
    institutions and the legal cannabis industry.
        It explicitly extends the safe harbor to Community Development
    Financial Institutions (CDFI) and Minority Depository Institutions
    (MDI)--who serve underserved communities facing challenges in accessing
    capital and provide affordable access to financial services--so they
    can also serve cannabis businesses.
        And, after much consultation with colleagues and outside experts,
    it now includes provisions to address both concerns around equity and
    issues around law enforcement and money laundering raised in a memo
    released last year by the Department of Justice.
        As a result, we have a piece of legislation that enjoys strong
    bipartisan, bicameral support from people who believe the time has come
    to change our approach to these industries and how they are able to
    operate.
        It is beyond unacceptable that, with more than half the country
    embracing some form of legalized cannabis, we would continue to allow
    this dangerous and untenable situation of forcing legitimate business
    to operate entirely in cash here in the 21st Century. I'd like to
    submit into the record letters from current Oregon cannabis retailers
    sharing their own stories of the challenges and dangers facing them in
    this all-cash environment. Each of these stories represents thousands
    more just like them all across the country.
        So Mr. Chairman, Mr. Ranking Member, and all the Members of this
    Committee, I urge you to work quickly to consider and pass this bill
    and make our communities safer by ensuring equal access to the
    financial system for the cannabis industry. Thank you.
                                     ______

                   PREPARED STATEMENT OF SENATOR STEVE DAINES
        Thank you, Mr. Chairman, and thank you to our witnesses for being
    here today. I am very pleased that the Banking Committee is holding a
    hearing on this important topic. Across my home State of Montana and in
    communities across the country, legal businesses are facing a public
    safety crisis. These businesses, often forced to operate in all cash,
    are appealing targets for robbers. In Washington State for instance,
    2022 saw at least 100 armed robberies at cannabis retail stores, the
    most in the past 10 years. Tragically, several of these incidents ended
    in bloodshed.
        The SAFE Banking Act would help address a major cause of this
    increase in violent crime by providing a safe harbor for depository
    institutions and service providers to transact with State-sanctioned
    marijuana businesses. In short, this bill would make it much easier for
    businesses to put their cash into banks.
        Some of the witnesses today will say that there are hundreds of
    banks and credit unions providing financial services to State-
    sanctioned marijuana businesses, and that SAFE Banking is not needed.
    However, the truth is that only approximately 9 percent of the
    financial institutions in America have provided services to any
    marijuana-related businesses, meaning that those who are providing
    financial services face limited competition and charge substantially
    more to bank these clients than other industries, resulting in services
    being prohibitively expensive for many businesses.
        This legislation would also help Federal and State law enforcement
    distinguish between legal and illegal marijuana businesses. Opponents
    of this bill will say that SAFE Banking will help to grow the $25
    billion market for marijuana in the United States. However, the real
    size of the market is $100 billion, of which roughly 75 percent is
    illicit cannabis production.
        Allowing cash from legal, regulated businesses to enter the banking
    system will help law enforcement more easily distinguish legitimate
    actors and focus more of their resources on prosecuting the illicit
    market, and in so doing, may actually shrink the size of the overall
    industry and reduce consumption in the United States. If nothing else,
    SAFE Banking will greatly increase tax compliance and tax revenue for
    States.
        This legislation is also widely supported by banks, credit unions,
    the insurance industry, and many other service providers who at present
    do not have clear guidelines for how they can safely and legally
    transact with State-sanctioned marijuana businesses. Roofers, plumbers,
    electricians, and other similar service businesses are technically at
    risk of engaging in illegal money laundering simply for putting on a
    few shingles, fixing a leaky pipe, or safely wiring a building. In
    States where these are legally operating businesses, do opponents of
    this bill really believe hard-working tradesmen and women should be put
    in this impossible position?
        A bipartisan coalition of 38 State and territorial attorneys
    general came out in support of this bill in the past, and we have
    strengthened it considerably based on feedback from the Department of
    Justice.
        Nine sheriffs across Montana have publicly voiced support for this
    bill. To quote Lincoln County Sheriff Darren Short, `` . . . It
    concerns me that businesses have such a large amount of cash on hand,
    which is clearly a liability and a public safety issue. I also believe
    that any all-cash business is going to be rife with fraud, so it's an
    accounting problem as I see it too. As far as marijuana legalization
    goes, the voters of Montana made that decision and now it's our role to
    make it safe and make it work. I'm happy to support the SAFE Banking
    Act.''
        This bill does not legalize marijuana and I do not support Federal
    legalization of marijuana. However, the people in States across this
    country have spoken, and it is abundantly clear that the status quo is
    not only untenable, it is dangerous. The SAFE Banking Act is a
    commonsense bill that can and should pass, and would immediately
    improve the public safety threats we are seeing on the ground. I ask my
    colleagues to look at this issue with open eyes and I look forward to
    hearing their input today.
                                     ______

                     PREPARED STATEMENT OF ADEMOLA OYEFESO
    International Vice President and Director of Legislative and Political
      Action Department, United Food and Commercial Workers International
                                  Union (UFCW)
                                  May 11, 2023
        Good morning, Chair Brown, Ranking Member Scott, and Members of the
    Committee. Thank you for the opportunity to testify today. I am Ademola
    Oyefeso with the United Food and Commercial Workers International Union
    (UFCW). UFCW represents over 1.3 million hard-working men and women who
    work in highly regulated industries including over 10,000 workers in
    the cannabis industry. Our cannabis members can be found in a dozen
    States everywhere from seed to sale. As the leading union in cannabis,
    UFCW is committed to shaping this industry into one that provides safe,
    well-paid, and family-sustaining jobs for all its workers.
    Cannabis Banking Is a Worker Issue
        All jobs have challenges, but few industries face the unique
    challenge of a Federal prohibition on access to legal banking. Without
    access to banks, cannabis businesses have little choice but to resort
    to cash for all parts of their business. Customers pay in cash, workers
    are paid in cash, and large amounts of cash must be securely stored and
    transported. A cannabis worker in Oregon told us about a friend who
    also works in retail cannabis and had to use his own car to carry
    upwards of $40,000 cash with no protection or security. The cash-heavy
    nature of cannabis retail creates safety and financial problems for
    businesses, customers, workers, and the communities they serve.
        The majority of people employed in the cannabis industry are
    workers, not owners, and lack of banking has become a real issue for
    this growing workforce. In order for workers in the legal cannabis
    industry to have the same opportunities as all other workers, Congress
    must directly address the cannabis banking challenge.
    Cash Dominated Industry Puts Workers at Financial Risk
        Because of cannabis' Schedule I status under Federal law, banks,
    payroll services, and credit card companies are effectively prohibited
    from providing traditional financial services to cannabis businesses.
    This includes holding deposits and credit card processing of sales.
    Consequently, nearly all cannabis retailers and delivery services must
    operate entirely on a cash-only basis. Without access to a federally
    insured bank, cannabis employers must find alternative arrangements to
    pay their workers, which generally means paying them with cash. There
    are a few banks that are willing to provide their services to cannabis
    employers, most do not, which leaves workers struggling to find access
    to personal banking services. As a result, most cannabis workers lack
    traditional proof of employment like a paystub.
        Without a bank account that will accept their paycheck, cannabis
    workers struggle in purchasing homes and must find alternatives to
    traditional banking to do so. This includes finding a cosigner or
    coborrower, paying in cash, or finding alternative credit unions.
    However, none of these alternatives are a guarantee, and workers often
    find themselves having to pay higher rates due to their work in a fully
    legal profession in their State.
        Imagine this scenario: a cannabis worker is filling out an online
    apartment rental application and they get to the section for proof of
    income with a list of applicable documents to be attached. They work
    for a perfectly legal business in their State but get paid in cash and
    simply cannot proceed any further on the form because they have no
    proof of employment.
        The lack of banking makes it difficult to get personal loans for
    homes and cars--even with high credit scores. In fact, the Federal
    Housing Authority's (FHA) loan program explicitly denies loans for
    workers in this industry for this reason.
        Ashley Batista, a member of UFCW Local 1776KS and a worker at
    Jushi, a cannabis grow and processing facility in Scranton,
    Pennsylvania, notes the challenges and benefits of banking for her and
    her coworkers.

            I've watched several coworkers who saved up every nickel and
            dime for a downpayment on a home just to be denied a home loan
            due to the legality of their profession. And because cannabis
            is still illegal at the Federal level, many cannabis workers
            are unable to provide traditional sources of proof of income,
            such as tax returns. This can make it challenging for us to
            qualify for home loans. Digital transactions through
            traditional banks [would] ensure timely and secure payment
            processing for both cannabis workers and the patients. This can
            help reduce the risk of payment risks such as robberies and can
            also eliminate the need for carrying large amounts of cash.
            Many of us cannabis workers may face negative stereotyping and
            discrimination, which can impact our credit scores. Having the
            support of traditional banks would help move away from the
            stigma on cannabis and give us the opportunity to qualify for
            home loans. This can help improve financial stability and allow
            us as workers to plan for the future.

        In addition, it is unclear if payroll benefits such as Social
    Security, disability, unemployment insurance, Medicare, and Medicaid
    are being properly deducted when you do not have access to a
    conventional payroll service.
        When cannabis employers gain access to conventional banking
    services, their workers get the economic security of a steady paycheck,
    as well as the peace of mind knowing their payroll taxes and benefits
    are being properly funded.
    Cash Puts Workers in Physical Danger
        Cannabis businesses are forced to have large amounts of cash on
    hand, putting targets on the backs of workers and customers alike. We
    have seen several instances across the country where cannabis
    dispensaries experienced violent robberies. Ms. Batista said, ``Most
    dispensaries are still cash only so that not only puts the patients at
    risk who are walking in with cash to purchase but also the dispensary
    workers who are at the location with large amounts of cash behind the
    register. With these MSOs cutting costs this affects the amount of
    security that is implemented at these locations. Many employers have
    cut their security teams entirely and solely rely on the workers to
    watch surveillance cameras. This is a huge safety concern to the
    workers because dispensaries are burglarized and robbed at roughly the
    same rate as other cash intensive businesses.''
        Miranda Beck, a cannabis worker at Starbuds in Baltimore, Maryland,
    told us a story of a security guard and a worker who were robbed of
    cash and cannabis product at gunpoint. She said, ``It's well known that
    there is a lot of cash inside dispensaries because dispensaries can't
    accept credit cards. At Starbuds we were also paid in cash--each week
    we would have to go in (even on our days off, which was hard for some
    people without their own cars) to collect an envelope with our wages.
    They took taxes out, but we were paid in cash--so were the vendors. I
    worried about safety at work every day--not just for myself and my
    coworkers, but our patients. Some patients were robbed in the parking
    lot when they were coming in to buy their medicine.''
        One local leader in California notes, ``The lack of regulation and
    security measures in the cannabis industry also puts delivery drivers
    at risk, as they may not have access to proper training or protective
    equipment. Without banking, our cannabis delivery driver members carry
    large amounts of cash and valuable products, making them a prime target
    for robbery and assault.''
        Cannabis workers, like every other business venture, deserve the
    same right to work in safe conditions.
    Cannabis Banking Is an Equity Issue
        Equity is an empty and hollow phrase unless it is made real and
    meaningful to the majority of working people living in those
    communities that were harmed by the war on drugs. Most of the
    discussion around equity in the cannabis industry centers upon the
    ownership of businesses with emphasis primarily placed on whether
    members of communities of color will be positioned for generational
    wealth. This misses the point for workers. The greatest benefit of
    cannabis legalization will NOT come from creating a handful of
    successful, wealthy business owners of color, but from fostering a
    pipeline of good paying jobs throughout the cannabis industry that are
    widely available to persons from impacted communities. And equity
    cannot be achieved as long as we are barring workers from traditional
    banking. By denying these services to workers, we have created a
    barrier to entry during the infancy of this lucrative industry for
    those who did not and still do not have the means to overcome these
    personal financial obstacles.
    States Are Leading the Way
        States have been leading the way in passing legislation and
    regulations that ensure a safe, legal, and thriving cannabis industry.
    In Washington State, the State government worked with local credit
    unions and small banks to encourage them to accept business from
    dispensaries. UFCW members in Washington have said that they like the
    State cannabis laws because they provide payroll stability.
        A regular paycheck goes hand-in-hand with good wages, quality
    affordable care, and a secure retirement, all things central to what
    UFCW negotiates for its members and that come with a good union
    contract.
        Even when States do the right thing it is not enough, for even if a
    worker DOES have a paystub, it is still illegal for financial
    institutions to consider income earned in a CRB when considering
    offering services like auto and home loans.
    Shaping the Cannabis Industry To Be Good for Workers
        The emerging cannabis industry presents an unparalleled opportunity
    for Government to shape an industry from the ground up. There are many
    potential paths for cannabis but not all paths benefit the workers in
    the industry. A 2021 Economic Policy Institute report analyzed a high-
    road and low-road scenario for the future of the cannabis industry. \1\
    Under a low-road scenario, cannabis workers are subject to the same
    harmful practices inflicted on workers in similar agriculture settings:
    low wages, few workplace benefits, unprotected statuses as contract
    workers, and erratic scheduling. Under the high-road scenario,
    unionization ensures that cannabis jobs are good jobs. Cannabis workers
    in the high-road scenario could make an estimated $2,810 to $8,690 more
    per year than under the low-road scenario. Access to banking is part of
    a high-road scenario for cannabis workers.
    ---------------------------------------------------------------------------
         \1\ https://www.epi.org/publication/ensuring-the-high-road-in-
    cannabis-jobs/
    ---------------------------------------------------------------------------
        Many proposals for Federal legalization have focused on taxes,
    licensing, plant size, THC levels, and sometimes equity in ownership--
    and we applaud many of these efforts. Policymakers, however, have
    failed to include measures protecting cannabis workers--and SAFE
    Banking will help ensure that the rank-and-file employees share
    equitably in the growth of the industry, with good-paying, safe,
    family- and community-sustaining jobs. A paycheck is a necessary step
    towards making cannabis jobs, good jobs.
    Congress Should Support Safe, Legal Banking for Cannabis Workers
        UFCW cannabis workers have said that access to traditional banks
    and payroll services can help significantly improve their lives by
    increasing financial stability, providing more and convenient secure
    payment processing which leads to safe working conditions and benefits.
        Cannabis workers do not deserve to be treated as criminals and
    should not have to struggle with financial and legal ambiguity while on
    the job. On behalf of all the workers in the cannabis industry, we urge
    Congress to give the same access to the financial systems and Federal
    benefits that all other American workers already enjoy.
        Thank you for the opportunity to testify and I would be happy to
    answer your questions.
                                     ______

                      PREPARED STATEMENT OF KEVIN A. SABET
         President and CEO, Smart Approaches to Marijuana, and Fellow,
                                Yale University
                                  May 11, 2023
        Chairman Brown, Ranking Member Scott, Members of the Committee,
    thank you for inviting me to testify before you today. My name is Kevin
    Sabet, and I am the President and CEO of Smart Approaches to Marijuana,
    a nonpartisan, nonprofit organization dedicated to promoting a health-
    first approach to drug policy. I served in three White House drug
    policy offices, for both Democrats and Republicans, most recently for
    President Obama from 2009 to 2011. In 2013, Representative Patrick
    Kennedy and I founded SAM, along with top scientists from around the
    country. SAM believes no one should be incarcerated just because they
    got caught with a joint, but we also believe that we should not create
    a new addiction-for-profit industry in the model of Big Tobacco. SAM
    partners with a wide variety of like-minded organizations, including
    major medical societies, treatment and recovery advocates, law
    enforcement organizations, the NAACP, AAA, Parent-Teacher Associations,
    and drug prevention groups to advocate for a better, safer, more
    equitable approach to drug policy.
    Overview
        There are three main problems with passing the so-called SAFE
    Banking Act:

      1.  Today's marijuana is dangerous, and this bill would open the
            marijuana industry to major institutional investors who will
            create even more hazardous products.

      2.  This bill would open the U.S. financial system to activity from
            transnational criminal organizations who intend to harm
            Americans.

      3.  It purports to fix a fake problem. Today's marijuana businesses
            are not dealing primarily with cash; there are hundreds of
            banks working with pot businesses, as outlined, for example, in
            a recent Bloomberg News piece entitled ``Cannabis Banking Is
            Booming Despite Federal Uncertainty''. \1\
    ---------------------------------------------------------------------------
         \1\ See https://www.bloomberg.com/news/newsletters/2022-01-18/
    marijuana-banking-is-moving-forward-despite-federal-uncertainty
    ---------------------------------------------------------------------------
    The Potential Increase of Wide-Spread Investments in the Marijuana
            Industry
        I want to examine two scenarios that could result from the passage
    of the SAFE Banking Act.
        The first is the best-case scenario, and the intended effect of the
    bill: let's say only State-licensed marijuana producers and stores
    participate in the Federal banking system. This presents us with
    problem number one.
        For expert testimony on the purpose of the SAFE Banking Act, I
    refer you to former Speaker John Boehner's marijuana investing seminar,
    \2\ in which you find these statements, ``I was on the board of a major
    tobacco company, Reynolds. You think Big Tobacco is staying on the
    sidelines? I've talked to these guys, they are not going to sit this
    one out. And they have the dollars to acquire whoever they want . . .
    .'' His seminar partner said, ``With traditional investments, only
    17\1/2\ percent of the money comes from little fish like you and me.
    The other 82\1/2\ percent is from the big players, the major investment
    firms, hedge funds, pension funds, established corporations. Banking
    restrictions are preventing almost all of those investment firms and
    funds from diving headfirst into cannabis.'' Boehner continued, ``Well,
    they're dying to get in. I'm helping some of these bigger fish get
    ready to invest. There are hundreds of billions of dollars sitting on
    the sidelines''.
    ---------------------------------------------------------------------------
         \2\ https://www.youtube.com/watch?v=CZXGiRcXLJo
    ---------------------------------------------------------------------------
        The SAFE Banking Act could have been drafted to narrowly address
    point-of-sale transactions. Instead, the bill is written specifically
    to allow those ``hundreds of billions of dollars sitting on sidelines''
    to invest. Does anyone think that public health is going to be the
    driving force behind these multinational corporations who must report
    quarterly earnings? For a preview, we need only to look to Canada,
    where the CEO of a major marijuana corporation was ousted for a single
    quarter of poor sales, and Altria (formerly Philip Morris) has made a
    multibillion-dollar investment into the marijuana industry. We should
    also note that the former CEO of Purdue Pharma--who oversaw all of
    Oxycontin's deceptive marketing practices--saw his next big business
    opportunity in leading a marijuana company.
        Moreover, despite assurances to the contrary, the marijuana
    industry has little interest in advancing racial equity. Following more
    than a decade of commercialization, only 2 percent of business owners
    in the industry are Black. We have also seen how the industry targets
    vulnerable communities, including low-income communities and
    communities of color. The industry is disproportionately concentrating
    dispensaries in these communities, which results in the
    disproportionate concentration of marijuana's health-related harms and
    the continuation of preexisting disparities. Legalization and
    commercialization will continue to fail to live up to their lofty goals
    of achieving racial equity.
    The Influx of Potent Products Into the Market
        It's also important that we not deal with this question in the
    abstract. When you see marijuana on TV, you see fields or warehouses of
    what many assume is a harmless plant. They make it look innocuous. What
    they don't show you are the concentrates and extraction systems,
    because industrial-scale extraction looks like something straight out
    of the television show Breaking Bad. Yet, concentrates are what they
    are heavily promoting on social media. Marijuana is not just a plant
    anymore. It has been highly processed into something that cannot be
    found in nature and has a devastating impact on the brain in terms of
    addiction and mental health. One kind of marijuana concentrate, called
    ``shatter,'' from Acreage Holdings, is from former Speaker Boehner's
    new gig. It has marijuana strains with names like ``Thin Mint Girl
    Scout Cookies''.
        I also want to address kid-friendly edibles. You see, under the
    marijuana industry's logic, kids are only attracted to gummies in the
    shape of animals or cartoon characters, not to brightly colored, sugar-
    coated gummies in the shape of vegetables, geometric shapes, or pot
    leaves. Washington State got so frustrated with the number of children
    ending up in emergency rooms from accidental ingestion of pot candies
    that they were going to ban them completely--but it only lasted a week,
    and the marijuana industry released their new plan to self-regulate
    with brightly colored geometric shapes and pot leaves only.
        For evidence of the adverse effects of these products, one can look
    at our 10-year experience in the United States with the legalization,
    commercialization, and normalization of marijuana. According to the
    National Survey on Drug Use and Health, there were 52.45 million past-
    year marijuana users 12 or older in 2021, compared to 31.53 million in
    2012 and 25.76 million in 2002. The rate of past-month use, a measure
    indicative of more frequent use, has grown at an even more concerning
    rate: there were 14.58 million in 2002, 18.86 million in 2012, and
    36.36 million in 2021. The rate of daily or almost daily use has more
    than quadrupled, increasing from 3.13 million in 2002 to 5.35 million
    in 2012 and 13.25 million in 2021. For context, there were 12.58
    million daily users of alcohol in 2021. More people are using
    marijuana, and they are using it more heavily.
        Similarly, the rate of marijuana use disorder, also known as
    addiction, has been trending upward. In 2002, 4.29 million Americans 12
    or older had a marijuana use disorder, compared to 4.42 million in 2018
    and 4.84 million in 2019, the last year the DSM-IV definition was used.
    Following the transition to DSM-V, 14.21 million were estimated to have
    marijuana use disorder in 2020 and 16.27 million were estimated to have
    it in 2021. More Americans are getting addicted to marijuana.
        Alongside increases in the rates of use have been increases in the
    adverse effects related to use. There were 804,285 marijuana-related
    emergency department visits in 2021, according to the Drug Abuse
    Warning Network. Of concern, more than 72,000 involved children younger
    than the age of 18. Black individuals accounted for more than 195,000,
    or 24.27 percent, indicating that the adverse effects of use are
    disproportionately harming communities of color.
        In 2021, according to the National Poison Data Center, there were
    7,692 calls to poison control centers about marijuana-infused edibles,
    7,625 about dried marijuana, 1,138 about concentrated extracts of
    marijuana, and 1,014 about synthetic marijuana, among other forms.
    Regarding single exposures involving edibles, for example,
    approximately 43 percent of calls, or nearly 3,000, were for children 5
    or younger, and approximately 18 percent, or nearly 1,300, were for
    children between the ages of 6 and 12. Irresponsible adults are leaving
    their marijuana out around the house, and it is having tragic
    consequences for their children, who unknowingly eat it and find
    themselves needing to be rushed to the hospital.
        In fact, 1 in 3 users are estimated to have a marijuana use
    disorder. Daily users of marijuana above 10 percent THC are nearly five
    times more likely to develop psychosis than non-users of marijuana.
    Users of high-potency marijuana are four times more likely than users
    of low-potency products to become addicted to marijuana. The National
    Institute on Drug Abuse states, ``The risks of physical dependence and
    addiction increase with exposure to high concentrations of THC, and
    higher doses of THC are more likely to produce anxiety, agitation,
    paranoia, and psychosis.'' Just last week, a study came out about the
    link between marijuana use disorder and schizophrenia, finding that as
    many as 30 percent of cases of schizophrenia among males aged 21-30
    could have been prevented if we had averted marijuana use disorder.
        So, that is the best-case scenario, if everything goes according to
    plan: more money, more customers, more profit, more destruction.
    The Potential Increase of Cartel Activity
        But there is a much darker possibility, and it doesn't require a
    stretch of the imagination because it is already happening. This is
    concern number two. International cartels have infiltrated legalized
    States and have used the cover of legalization to conduct massive grow
    operations, often in upscale neighborhoods. \3\ The SAFE Banking Act
    provides a scalable new avenue for these cartels to infiltrate the
    banking system in a much more systematic way.
    ---------------------------------------------------------------------------
         \3\ https://www.nbcnews.com/news/us-news/foreign-cartels-embrace-
    home-grown-marijuana-pot-legal-states-n875666; https://www.pbs.org/
    newshour/show/how-colorados-marijuana-legalization-strengthened-the-
    drugs-black-market
    ---------------------------------------------------------------------------
        For example, I refer you to a letter from 2023 from a bipartisan
    group of former Administrators of the Drug Enforcement Administration
    and Directors of the White House Office of National Drug Control Policy
    who describe a threat that parallels the multibilliondollar Black
    Market Peso Exchange.

        To quote from the letter:

            Because cash made from the sale of marijuana looks the same
            regardless of what it was used to pay for, it will be extremely
            difficult for banks to know whether large bundles of cash
            presented for deposit were made from the sale of marijuana
            rather than from the sale of heroin, fentanyl, or
            methamphetamine.

            In short, the SAFE Banking Act could inadvertently allow
            cartels to bring into banks duffel bags of cash made from the
            sale of those illicit drugs that are killing tens of thousands
            of Americans every year.

            Notably, they concluded, ``We urge the Senate Banking Committee
            to reject the SAFE Banking Act and other legislation that would
            give these cartels more cover and more access to the U.S.
            financial system.''

        This letter helps explain why eliminating cash will never stop
    marijuana dispensaries from being targeted for robbery: in the majority
    of cases, the burglars are there to steal marijuana, not cash. The
    marijuana is more easily accessed and is extremely valuable in its own
    right. A marijuana store is more akin to a jewelry store than a
    convenience store. A recent illustration comes from thieves who backed
    a pickup truck into a Michigan pot shop, stole all of the marijuana,
    and then left. They came back 20 minutes later to steal the ATM as an
    afterthought. \4\ Moreover, in December 2022, thieves in Los Angeles
    stole ``hundreds of pounds of marijuana'' from a dispensary. And in
    March 2023, criminals in Santa Cruz stole ``half-a-million dollars
    worth'' of marijuana.
    ---------------------------------------------------------------------------
         \4\ http://www.fox2detroit.com/news/local-news/thieves-crash-
    truck-into-detroit-marijuana-dispensary-steal-pot-atm
    ---------------------------------------------------------------------------
        This leads us to reason three--the fake excuse to support this
    bill. It is built around a lie that these businesses mainly deal only
    with cash. In fact, the U.S. Department of Treasury's Financial Crimes
    Enforcement Network reported that nearly 800 banks worked with
    marijuana businesses in the fourth quarter of 2022, up from 54 in the
    first quarter of 2014. Our own investigation revealed that many
    marijuana dispensaries accept credit and debit cards as payment,
    debunking the myth that they are forced to operate as cash-only
    businesses.
        More broadly, supporters of legalization assured the general public
    that this policy experiment would result in the displacement of the
    illicit market--consumers would purchase from dispensaries, not dealers
    on the corner, they argued. However, as we have seen in States across
    the country, the opposite has occurred. The expansion of the illicit
    market has coincided with the legalization of marijuana, to the
    detriment of public health and safety.
        According to a September 2022 report from Leafly, a pro-marijuana
    publication, 80 percent of marijuana sales in New Jersey continue to
    occur in the illicit market. In Michigan, they estimated that 60
    percent of sales occur in the illicit market. And in California and
    Illinois, it is 55 percent. As we have recently seen in New York,
    particularly in New York City, legalization has given illicit operators
    cover to open unregistered, unlicensed dispensaries--1,400 illicit
    shops have popped up in New York City alone. Evidently, legalization
    has failed to eliminate the black market and, in some regards, has
    exacerbated it. The SAFE Banking Act would add fuel to the fire by
    allowing illicit actors to launder and deposit their illicit proceeds.
        The U.S. Department of State's International Narcotics Control
    Strategy Report mentioned, ``U.S. consumer demand for illicit marijuana
    has increased following marijuana regulation in several U.S. States,
    due to higher costs for legal marijuana and reduced illicit domestic
    production.'' Additionally, the DEA's most recent National Drug Threat
    Assessment stated, ``some marijuana produced by State-licensed growers
    is diverted and sold illicitly rather than through State-licensed
    retailers,'' suggesting that legalization often fuels the black market
    rather than replaces it.
    What This Bill Is Not About
        Cannabidiol (CBD) and hemp were federally descheduled through the
    2018 Farm Bill, and hemp growers have full access to banking services.
    FDA-approved CBD products have been demonstrated through clinical
    trials to have a medicinal benefit for certain childhood seizures.
        By contrast, marijuana producers are growing and manufacturing
    incredibly high-potency products that are orders of magnitude stronger
    than anything available in the Woodstock days. What we think of as
    marijuana from those days was only 1-3 percent THC and contained a
    relatively high proportion of CBD, which acted as a neuroprotective
    agent. Today's marijuana concentrates can have up to 95 percent THC and
    no CBD. Between 1995 and 2021, the average potency of marijuana
    increased from 3.95 percent to 15.34 percent THC, while the percentage
    of CBD has remained below 0.5 percent. The average potency of vapes and
    concentrates has increased at a similar rate.
        Nora Volkow, the director of NIDA, testified, ``The increasing
    availability and potency of cannabis along with the proliferation of
    new cannabis products and methods for consuming them raise serious
    public health concerns,'' adding ``the risks of physical dependence,
    addiction, and other negative consequences increase with frequent use
    and exposure to high concentrations of THC.'' And the Colorado
    Department of Public Health & Environment concluded, ``it is clear that
    use of products with high concentrations of THC are associated with
    higher rates of psychiatric disorders, such as schizophrenia,
    psychosis, and generalized anxiety disorder.''
        What do you think is driving the increase in the potency of
    marijuana? The profit-driven marijuana industry. By getting more
    individuals addicted to marijuana, they can convert nonusers and
    occasional users into lifelong customers. Drawing on the previously
    cited rates of use and marijuana use disorder across the country, we
    are seeing this strategy play out with tragic consequences. What's
    more, though the American Medical Association has called for the
    potency of marijuana to be limited--only a few States have adopted
    sensible potency caps--the industry continues to lobby fiercely against
    these regulations. The marijuana industry will continue to produce,
    promote, and sell ever-stronger products, with little to no regard for
    public health and safety.
        We often hear that supposedly ``47 States have legalized some form
    of cannabis'' and we have to do something to accommodate those States.
    First of all, many of those States only created programs for
    compassionate distribution of non-intoxicating CBD, which was also
    federally legalized when produced from hemp in the 2018 Farm Bill. It
    is disingenuous to lump in those States when they now have a pathway to
    full compliance with Federal law. I disagree that we should be fully
    legalizing and commercializing high-potency marijuana, but if the other
    witnesses want to do it, they should follow the path of the Farm Bill
    and have that debate.
        Other States have more cautious medical marijuana programs, not
    allowing it to be smoked, and could conduct research programs that
    could be converted into legitimate FDA clinical trials with early
    access programs for suffering people. There is a right way to research
    and prescribe medicines, and that path runs through the FDA approval
    process.
        On the other extreme are States like California, where anyone can
    qualify for a medical marijuana card under the thinnest of pretexts,
    and it essentially functions as recreational marijuana for anyone
    willing to go through the minor inconvenience of a pot doctor's
    recommendation via a 5-minute Skype session.
        And then there are the States that have legalized and
    commercialized recreational marijuana. These States are doing an
    abysmal job of regulating the drug, with rampant underground markets,
    out-of-State diversion, the highest rates of youth use in the Nation,
    skyrocketing use for 18- to 24-year-olds (when the brain is still
    developing), and as much as a doubling in fatalities due to marijuana-
    impaired driving. \5\ We should not be expanding that failed experiment
    to other States.
    ---------------------------------------------------------------------------
         \5\ https://learnaboutsam.org/wp-content/uploads/2019/06/2019-
    Lessons-Final.pdf
    ---------------------------------------------------------------------------
        Indeed, the voters in Arkansas, North Dakota, South Dakota, and
    Oklahoma recently rejected ballot measures to legalize and
    commercialize recreational marijuana. These outcomes suggest that
    support for legalization was initially overestimated and that the
    public is becoming increasingly aware of the unintended consequences
    associated with this incautious policy.
    Whose Problem Are We Solving?
        Today's modern marijuana industry is structured around catering to
    heavy users. Daily and near daily users consume 87 percent of the
    marijuana in the State of Colorado. \6\ If you want to be successful in
    the marijuana business, that's who you have to sell to, and those users
    have built up a high tolerance and high dependence. Marijuana
    businesses must meet the demand they have created if they want to stay
    in business and not lose their customers to competitors. If they don't
    aggressively market the highest potency products available, someone
    else will and they will lose market share. Therefore, the business
    model becomes the highest potency for the cheapest price, and no State
    has successfully implemented a potency cap. Advancing a business model
    of creating new instances of substance use disorder during an addiction
    crisis is grossly irresponsible as a matter of public policy. Notably,
    according to the 2021 National Survey on Drug Use and Health, among
    past-month users, there were about five times as many daily users of
    marijuana as alcohol.
    ---------------------------------------------------------------------------
         \6\ Colorado Department of Revenue: Market Size and Demand for
    Marijuana in Colorado (2017).
    ---------------------------------------------------------------------------
    The Addiction Crisis
        The fundamental question before us today is whether we should
    promote and normalize drug use during an overdose and addiction crisis
    or discourage it and help people seek treatment and achieve recovery.
    By skipping ahead to a technicality over banking rules, the profit-
    driven marijuana industry is hoping to gain many of the benefits of
    Federal legalization while averting a debate over the public health
    effects associated with this policy. But make no mistake, a policy
    change around banking would have massive public health and safety
    ramifications, so we are shirking our duties if we do not consider the
    full question. The so-called SAFE Banking Act--which should be called
    the Addiction Banking Act--will allow the expansion of an industry
    pushing new, exponentially more powerful derivatives of marijuana
    before any of its health or other societal impacts are fully
    understood.
        Banks currently want to have it both ways: they say they are not
    taking a position on legalization, but they want to profit from a
    fabulous new line of business: depositing federally illegal proceeds.
    As I am sure you know, marijuana remains a Schedule I substance,
    meaning it has a high potential for abuse and no accepted medical
    benefit. I am amazed that no one has called them on it. It is an
    untenable position. If they want to benefit from the sale of 99 percent
    potency concentrates, marijuana-infused candies and gummies, and high-
    potency vapes that are marketed to young demographics through social
    media influencers using the playbook pioneered by Big Tobacco, they
    should be consistent and argue to have those things legalized and
    advertised. But they are not doing that, because they know that their
    public reputation would take a hit. So instead, they argue that they
    should participate in what is literally the definition of money
    laundering for federally illegal proceeds but be held harmless for the
    damage to public health and public safety.
        We at SAM deal every day with families who have lost loved ones to
    addiction, and marijuana is a major part, if not the defining feature,
    of all of their stories. Contrary to the claims of the marijuana
    industry and legalization advocates, legalization is not resulting in a
    reduction in opioid deaths. These claims have been thoroughly debunked
    in recent studies in the Proceedings of the National Academies of
    Sciences and elsewhere. \7\ Instead, in a study of 34,000 individuals,
    marijuana users were discovered to be more than two times as likely to
    misuse prescription opioids or initiate nonprescription use of opioids.
    \8\
    ---------------------------------------------------------------------------
         \7\ Shover, et al., ``Association Between Medical Cannabis Laws
    and Opioid Overdose Mortality Has Reversed Over Time''. PNAS, June 10,
    2019. https://doi.org/10.1073/pnas.1903434116
         \8\ https://www.drugabuse.gov/news-events/news-releases/2017/09/
    marijuana-use-associated-increased-risk-prescription-opioid-misuse-use-
    disorders
    ---------------------------------------------------------------------------
        There is still an opportunity for the other witnesses at this table
    to wash their hands of the marijuana industry and say, ``we want no
    part of this coming nightmare.'' But, if they proceed, at least it will
    be with the full knowledge of what they are investing in: preying on
    the vulnerable through the marketing of high potency and kid-friendly
    products, and producing new cases of substance use disorder and serious
    mental illness.
        We can see where this is leading in our neighbor to the north,
    where Altria, formerly Philip Morris, the manufacturer of Marlboro
    cigarettes, has made a multibillion-dollar investment into the
    marijuana industry, paired with an even bigger investment in vaping
    giant Juul. These investments will have business synergy, as the latest
    data shows a 63 percent increase in youth vaping of marijuana in Juul-
    like devices. \9\ It took us over 100 years to reverse the public
    health impacts of the tobacco industry, who continually cast doubt on
    public health advocates with industry-funded bunk science. We have a
    chance today not to repeat those mistakes.
    ---------------------------------------------------------------------------
         \9\ Johnston, L.D., Miech, R.A., Bachman, J.G., Schulenberg, J.E.,
    and Patrick, M.E. (2018). ``Monitoring the Future National Survey
    Results on Drug Use 1975-2018. Overview, Key Findings on Adolescent
    Drug Use''. Ann Arbor: Institute for Social Research, University of
    Michigan.
    ---------------------------------------------------------------------------
        I appreciate the opportunity to appear before this Committee and
    thank the Committee in advance for thinking about our Nation's youth as
    you craft drug laws. I look forward to answering any questions you may
    have.
                                     ______

                    PREPARED STATEMENT OF MICHELLE SULLIVAN
               Chief Risk and Compliance Officer, Dama Financial
                                  May 11, 2023
        Chairman Brown, Ranking Member Scott, and the esteemed Members of
    the Committee, my name is Michelle Sullivan, and I am the Chief Risk
    and Compliance Officer for Dama Financial. I am honored to testify
    before this Committee to share my experiences and lessons learned in
    cannabis banking as well as my opinion on the SAFE Banking Act, S.
    1323. I have spent my career in banking, risk management and
    compliance, most recently with a regional bank in Kansas City,
    Missouri, before joining Dama in 2017.
        Dama is the largest and the first end-to-end provider of banking
    and payment solutions for legal cannabis businesses in the United
    States. Today, we partner with banks which allows our clients a single
    relationship with multiple financial solutions. This includes
    everything from access to banking and merchant services to cash
    management, payments, POS, and inventory management solutions.
        Dama was founded in 2016 to provide banking access to licensed
    cannabis-related businesses with a compliance first approach following
    the provisions outlined in the ``Cole Memo'' of February 14, 2014, as
    well the FinCEN Guidance, BSA/AML requirements and all applicable
    Federal and State laws.
        Dama partners with banks that would like to provide access to
    banking but do not always have the resources or expertise to run a
    high-risk, cash extensive cannabis banking program on their own.
        Dama has developed the gold standard of compliance frameworks to
    ensure we know our customers through enhanced onboarding, due
    diligence, and continued oversight. We do so in a safe and sound manner
    to minimize the risk of money laundering by preventing illegal
    operators and illicit cash from creating vulnerabilities in our
    financial ecosystem.
        To understand the true source of funds, Dama goes beyond the high-
    risk banking requirements of Federal law by doing the following:
    Drilling down to 10 percent of ownership under the UBO rule and
    performing onsite inspections and risk assessments that encompass
    inherent and residual risk throughout the life cycle of the
    relationship. We reject a fair number of businesses from qualifying for
    our services because they are not transparent with us and/or they don't
    meet our diligent standards.
        Because of these experiences, we believe the SAFE Banking Act
    should be stronger and encompass a more stringent statutory framework.
    We can't simply rely on existing guidance without more robust
    legislation from Congress. It is quite possible that banking standards
    will be more lax after the passage of the SAFE Banking Act than there
    is today.
        If Congress gives financial institutions a ``Safe Harbor'' to
    provide services to Cannabis Related-Businesses (CRB), it must provide
    a tougher framework than existing guidance. At a minimum, a financial
    institution should follow enhanced rules regarding board approved risk
    limits and deposit ratios and reporting criteria when limits are
    approached or breached with required technology and staffing expertise.
    We must also include enhanced due diligence and ongoing monitoring
    requirements, especially as it pertains to cash deposits and legacy
    cash.
        We also believe there is serious potential for confusion in the
    banking industry following the passage of this legislation. Will the
    cash truly get out of the system? Credit card companies have policies
    against banking illegal products which may prohibit cannabis
    transactions running on those rails even after the SAFE Banking Act
    passes. Without solving the larger decriminalization issues, we worry
    that the passage of the SAFE Banking Act alone could make problems
    worse by giving us a sense of resolution while huge conflict in Federal
    law still exists. This will still make it difficult for some financial
    institutions to proceed.
        Lastly, as Congress wrestles with this issue, we think it should do
    so with a clear understanding of the opportunities for cannabis banking
    today. This problem is not the urgent one that it once was. According
    to FinCEN, there are over 700 financial intuitions that work with legal
    cannabis businesses. Every company that meets the risk standards we've
    laid out should already be able to access a banking solution in
    America. In my opinion, we should pause and provide more teeth to the
    existing bill to protect the financial and banking industry as a whole.
        We are happy that Congress is having this hearing today. We believe
    that Congress should study these issues very carefully before moving
    forward. We look forward to answering your questions and working with
    Senators from both parties to resolve the cannabis banking issues
    facing our country.
                                     ______

                        PREPARED STATEMENT OF CAT PACKER
               Vice Chair, Cannabis Regulators of Color Coalition
                                  May 11, 2023
        Dear Members of the Senate Committee on Banking, Housing, and Urban
    Affairs: I urge you to support several recommendations offered to
    improve the SAFE Banking Act, especially to ensure that cannabis
    banking is fair--which is what the F in SAFE stands for.
        The Secure and Fair Enforcement Act of 2023, or ``SAFE Banking
    Act'', includes new provisions to ensure timely and more comprehensive
    data collection and reports that are inclusive of the hemp industry,
    veteran-owned businesses and small businesses. These are changes the
    Drug Policy Alliance (DPA) and the Cannabis Regulators of Color
    Coalition (CRCC) fought to include. Additional positive changes to the
    bill include granting marijuana workers access to Federal mortgage
    loans and explicitly extending the bill's protections to Community
    Development Financial Institutions (CDFIs), another provision DPA,
    CRCC, and our allies advocated for. \1\
    ---------------------------------------------------------------------------
         \1\ https://drugpolicy.org/press-release/2023/04/statement-
    reintroduction-safe-banking-act-congress
    ---------------------------------------------------------------------------
        These new, commonsense provisions focused on promoting fairness are
    encouraging signs that the bill is headed in the right direction.
    However more can, and should, be done to ensure that all communities
    have the opportunity to benefit from this limited but critical reform.
    Fortunately, with a few additional minor and technical amendments the
    SAFE Banking Act could be a significantly improved means to promote
    fair access to banking for those participating in the hemp and cannabis
    market.
        This letter details technical amendments to SAFE's existing
    provisions regarding updated guidance from Federal banking regulators
    and studies and reports on diversity and inclusion that seek to promote
    fair access to cannabis banking.
    Recommendations To Promote Fairness in Updated Guidance
    Past Cannabis Criminal Records as Red Flags
        The SAFE Banking Act would require Federal banking regulators to
    provide updated guidance to financial institutions regarding the
    provision of financial services to the cannabis and hemp industry.
    However, without additional provisions to ensure fairness, updated
    guidance may fail to adequately address access.
        My top priority is to ensure that past cannabis criminal records
    are not considered ``red flags'' or an automatic indication that a
    business may be engaged in unlawful activity.
        Existing guidance considers criminal records to be a ``red flag''
    or information that serves as an automatic indication that a business
    may be engaged in illegal activity. \2\ Although the guidance doesn't
    make specific reference to cannabis criminal records, I am concerned
    that past cannabis criminal records, especially those that have been
    expunged or are for activity that has been pardoned or is no longer
    prohibited under State law, will be considered automatically be
    considered information that serves as an automatic indication that a
    business may be engaged in illegal activity.
    ---------------------------------------------------------------------------
         \2\ https://www.fincen.gov/resources/statutes-regulations/
    guidance/bsa-expectations-regarding-marijuana-related-businesses
    ---------------------------------------------------------------------------
        Without proper context or consideration of State laws, failure to
    address this issue is likely to result in discriminatory practices
    against State-sanctioned cannabis businesses. I understand the
    importance of protecting financial institutions from involvement in
    illegal activities, but I also recognize that many individuals have
    been unfairly impacted by cannabis criminalization, particularly those
    in marginalized communities. Fortunately, existing guidance clarifies
    that future guidance can update what's considered a red flag and the
    SAFE Banking Act's existing requirement for updated guidance provides a
    timely and meaningful opportunity to address this issue.
        Many States have changed their laws and established programs to
    remove barriers associated with past cannabis criminal records
    including through expungement or licensing opportunities for cannabis
    businesses. At least 25 States have pardoned or expunged past cannabis
    criminal records, either for some or all types of offenses. \3\ And at
    least 15 States have laws that allow individuals with past cannabis
    criminal records to participate in State-legal markets. \4\ Moreover,
    in order to ensure that future guidance does not interfere with related
    State and local interests, I recommend that the SAFE Banking Act ensure
    that updated guidance from Federal banking regulators clarifies that
    cannabis criminal records that have been expunged or those that are
    associated with activity that has been pardoned or is no longer
    prohibited under State law will not automatically be considered as red
    flags.
    ---------------------------------------------------------------------------
         \3\ Arizona, California, Colorado, Connecticut, District of
    Columbia, Delaware, Hawai`i, Illinois, Maryland, Massachusetts,
    Michigan, Missouri, Montana, North Dakota, New Hampshire, Nevada, New
    Jersey, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont,
    Virginia, and Washington. https://ccresourcecenter.org/state-
    restoration-profiles/50-state-comparison-marijuana-legalization-
    expungement/
         \4\ Arizona, California, Colorado, Illinois, Massachusetts,
    Michigan, Nevada, New Jersey, New Mexico, New York, Rhode Island,
    Oregon, Vermont, Virginia, and Washington.
    ---------------------------------------------------------------------------
        By doing so, we can ensure that financial institutions have clear
    guidelines to follow when serving the cannabis industry, and that
    individuals who have been impacted by past cannabis criminalization are
    not unfairly penalized. Without this type of change, cannabis criminal
    records will continue to be a significant barrier towards participation
    in State-legal marijuana industries, disproportionately impacting Black
    and Brown entrepreneurs and undermining State efforts to address
    barriers associated with cannabis criminal records.
    Best Practices To Promote Fairness
        Although the SAFE Banking Act has provisions to study barriers to
    access to financial services for those in the hemp and cannabis
    industry, it lacks measures to proactively promote fairness in access
    to banking.
        The SAFE Banking Act inexplicably requires that Federal banking
    regulators' guidance for financial institutions servicing the hemp
    industry include best practices for financial institutions but includes
    no corresponding requirement for best practices within the requirements
    for updated guidance for the cannabis industry. Moreover, it's
    important that fairness be a primary goal of best practices.
        As such, I recommend that the SAFE Banking Act be amended to ensure
    that updated guidance from Federal banking regulators includes best
    practices for financial institutions to follow, including best
    practices to promote fairness, when providing financial services,
    including processing payments, to State-sanctioned marijuana businesses
    and hemp-related legitimate businesses.
    Information Sharing With Regulators
        For many State and local regulators the cannabis and hemp
    industry's ability to access financial services provides an opportunity
    for greater insight into their market and a means for increased
    regulatory oversight. However, although financial institutions and
    regulators already regularly share information back and forth, both
    could benefit from an established process that is consistent,
    transparent, and fair.
        In order to facilitate information sharing between financial
    institutions and regulators, I recommend that the SAFE Banking Act be
    amended to establish a process for financial institutions to follow,
    including best practices to promote fairness, when providing financial
    services, including processing payments, to State-sanctioned marijuana
    businesses and hemp-related legitimate businesses.
    Recommendations To Promote Fairness in Studies and Reports on Diversity
            and Inclusion
        Although the SAFE Banking Act would allow Federal officials to
    study and report on diversity and inclusion, these studies and reports
    can be significantly improved with a few technical amendments.
    Study State and Local Strategies To Address Barriers
        SAFE would require the GAO to study barriers to marketplace entry
    and success and barriers to access financial services for potential and
    existing minority-owned, veteran-owned, women-owned, and small State-
    sanctioned marijuana businesses and hemp-related legitimate businesses.
        It would also require the GAO to report its findings and
    recommendations to remove barriers and expand access. However, the SAFE
    Banking Act does not explicitly require the GAO to study or report on
    existing strategies, including those taken by State and local
    governments, to remove barriers and expand access. In order to ensure
    that the GAO report is informed by existing strategies and related
    lessons learned, I recommend that the SAFE Banking Act be amended to
    ensure that the GAO report on diversity and inclusion specify that the
    GAO is required to study and report on strategies, including those
    taken by State and local governments, to address barriers to market
    place entry and success, including in the licensing process, and the
    access to financial services for potential and existing minority-owned,
    veteran-owned, women-owned, and small State-sanctioned marijuana
    businesses and hemp-related legitimate businesses.
    Barriers to Marketplace Competition
        As mentioned above, SAFE would require the GAO to study and issue a
    report related to barriers to marketplace entry and success. However,
    as is the case with all businesses, and especially is the case with
    cannabis businesses, success is not guaranteed but largely dependent on
    a businesses' ability to compete. As such I recommend that the SAFE
    Banking Act be amended to clarify that the GAO's study on diversity and
    inclusion address barriers to marketplace entry and competition, or at
    least clarify that barriers to competition should be included in its
    consideration of marketplace barriers to success.
    Reports and Studies on Diversity and Inclusion Should Promote Fair
            Access not Expanded Access
        In addition to the GAO's report on diversity and inclusion, SAFE
    also requires a diversity and inclusion report from Federal banking
    regulators. SAFE requires both the GAO and Federal banking regulators
    to specifically make recommendations for ``expanding access'' to
    financial services.
        A quick example highlights why the SAFE Banking Act should be
    amended to require Federal officials to develop recommendations for
    promoting fair access to financial services instead.
        If Black Americans are 14.2 percent of the population, \5\ but
    found to represent only 2 percent of those with access to financial
    services, under a standard of ``expanding access'', Federal officials
    could simply make recommendations to raise this percentage from 2
    percent to 3 percent. Without fair access as the standard, minority-
    owned, veteran-owned, women-owned, and small State-sanctioned marijuana
    businesses and hemp-related legitimate businesses--and others will
    continue to be underserved by cannabis banking.
    ---------------------------------------------------------------------------
         \5\ https://www.pewresearch.org/social-trends/fact-sheet/facts-
    about-the-us-black-population/
    ---------------------------------------------------------------------------
    Other Technical Amendments and Recommendations
    SAFE's Purpose
        Although the 2021 version of SAFE included a purpose section, the
    2023 version does not. The purpose within the 2021 version stated ``The
    purpose of this Act is to increase public safety by ensuring access to
    financial services to cannabis-related legitimate businesses and
    service providers and reducing the amount of cash at such businesses.''
        I recommend reinserting a purpose section and amending the purpose
    of SAFE to read as follows: ``The purpose of this Act is to provide
    protections for financial institutions that provide financial services
    to State-sanctioned marijuana businesses, hemp-related legitimate
    businesses and related service providers, and to promote fairness and
    safety in the provision of related financial services.''
        Beyond ensuring that fairness and safety are explicitly stated as
    priorities, the inclusion of a purpose section is particularly
    important because SAFE would require that updated guidance from Federal
    banking regulators for financial institutions servicing the cannabis
    industry ``ensure consistency with the purpose and intent'' of SAFE.
    Without a purpose, this requirement is not practicable.
    Legacy Deposits
        SAFE includes new provisions that would create restrictions for
    financial institutions accepting cash deposits, which SAFE refers to as
    ``Legacy Deposits''.
        First as a matter of principle, the term legacy within the cannabis
    and hemp community has come to mean a number of different things, but
    generally centers around the idea of a longstanding participant in
    trade and or community. However, the SAFE Banking Act's use of the term
    ``legacy'' in reference to cash deposits, is largely disconnected from
    how this term is used in the cannabis and hemp trade community,
    especially considering that it creates a requirement that would likely
    prevent most legacy operators from accessing banking in that it limits
    a financial institution's ability to accept cash from a State-
    sanctioned marijuana business to a 90-day period. Moreover, these
    restrictions apply to all cash deposits. And the term legacy here
    doesn't add value but may instead cause contention and confusion.
    Therefore, instead of referring to these deposits as legacy deposits, I
    recommend that the SAFE Banking Act be amended to strike any reference
    to the term legacy and simply refer to these deposits as cash deposits.
        Moreover, the 90-day period should be reconsidered to specifically
    assess what impact this limitation has on promoting fair access to
    financial services for State-sanctioned marijuana businesses.
    Technical Clean Up
        Technical Clarification--Sec. 11(1) should be amended to ensure the
    Federal banking regulator's diversity and inclusion report includes
    ``hemp-related legitimate businesses.''
        Technical Clarification--Sec. 12 (a) should be amended to ensure
    the GAO study on diversity and inclusion includes ``removing barriers
    to marketplace success.''
        I urge your consideration of these requests for technical but
    meaningful improvements to SAFE to promote fairness and for your
    ongoing efforts to continue to work towards creating a more safe and
    fair regulatory framework.

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              RESPONSE TO WRITTEN QUESTION OF CHAIR BROWN
                          FROM ADEMOLA OYEFESO

    Q.1. Mr. Oyefeso, can you discuss how businesses that do not
    directly work with cannabis but provide products or services to
    legal cannabis businesses, such as gardening or construction
    companies, might also have their banking impacted by the
    Federal status of cannabis? How does this affect the workers of
    these businesses?

    A.1. UFCW represents workers who work directly for cannabis-
    related businesses and not ancillary businesses. Our members
    can be found in growing and cultivating facilities, in
    manufacturing and processing facilities, as well as in
    laboratories and dispensaries. The people who grow, process,
    test, distribute, and sell cannabis deserve a fair and safe
    workplace like any other worker in America.
        UFCW has established a cannabis apprenticeship program and
    been limited by the national banking laws. We are not able to
    take the program national, because of limits on interstate
    banking. UFCW believes all jobs in the cannabis industry should
    be family sustaining with good wages, benefits, and
    opportunities for advancement at every level from seed to sale.
    These jobs should have the skills and training that build the
    public and consumers' confidence in both the safety of the
    product and industry as a whole. One of the building blocks to
    achieve this is the professionalization of work in the industry
    through the establishment of cannabis industry apprenticeships.
    Training through apprenticeships ensures workers in this
    emerging industry have the skills and training required to be
    successful in the field. The SAFE Banking Act will enable UFCW
    to grow our apprenticeship program to meet the needs of
    workers, the industry, and the community.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
                 SENATOR MENENDEZ FROM ADEMOLA OYEFESO

    Q.1. Multiple surveys have shown that the cannabis industry is
    largely White and male dominated. Minority groups that
    disproportionately lack access to credit and preexisting
    relationships with banks and regulators face extra challenges
    in an industry like cannabis where financial service access is
    sharply limited and regulatory burdens are high.
        Would passing SAFE Banking reduce barriers to entry and
    make the cannabis industry more equitable?

    A.1. Cannabis banking is an equity issue. Since banks cannot
    loan money to CRBs you need to either self-capitalize or have
    access to capital--two things which prospective minority
    business owners have traditionally had less access to than
    their White, male counterparts.
        Many of the States legalizing cannabis have developed
    licensing schemes designed to meet the specific State's needs
    and policy goals including strong social equity provisions.
    Federal permitting, taxation, or regulation should build upon
    State laws rather than set a single Federal standard. It is
    important that Federal legislation preserve the State-based
    nature of the industry as much as possible. This will allow
    States to continue to regulate the industry in a way that
    respects established laws and community standards.
        Equity is an empty and hollow phrase unless it is made real
    and meaningful to the majority of working people living in
    those communities that were harmed by the war on drugs. The
    discussion of equity in the cannabis space is more than about
    who owns these businesses, but about all of the stakeholders--
    especially the industry's workers. The greatest benefit of
    cannabis banking will not come from creating a handful of
    successful, wealthy business owners of color, but from
    fostering a pipeline of good paying jobs throughout the
    cannabis industry that are widely available to persons from
    impacted communities. And equity cannot be achieved as long as
    we bar workers from traditional banking. This creates another
    race and class-based barrier of entry for workers.

    Q.2. Without access to traditional banking services, cannabis
    enterprises are forced to operate entirely in large sums of
    cash. As a result, news reports from the last few years have
    shown an uptick in armed robberies at cannabis dispensaries.
        What safety risks does forcing marijuana businesses to
    operate exclusively with cash raise for workers, businesses,
    and the broader community?

    A.2. Miranda Beck, a cannabis worker at Starbuds in Baltimore,
    Maryland, told us a story of a security guard and a worker who
    were robbed of cash and cannabis product at gunpoint. She said:

            It's well known that there is a lot of cash inside
            dispensaries because dispensaries can't accept credit
            cards. At Starbuds we were also paid in cash--each week
            we would have to go in (even on our days off, which was
            hard for some people without their own cars) to collect
            an envelope with our wages.

            They took taxes out, but we were paid in cash--so were
            the vendors. I worried about safety at work every day--
            not just for myself and my coworkers, but our patients.

            Some patients were robbed in the parking lot when they
            were coming in to buy their medicine.

        One UFCW local leader in California notes: ``The lack of
    regulation and security measures in the cannabis industry also
    puts delivery drivers at risk, as they may not have access to
    proper training or protective equipment. Without banking, our
    cannabis delivery driver members carry large amounts of cash
    and valuable products, making them a prime target for robbery
    and assault.''
        Cannabis workers, like every other business venture,
    deserve the same right to work in safe conditions. SAFE Banking
    is one very easy way to make our worksites safer, by allowing
    them to take debit and credit card transactions and thus not
    being such tempting targets for theft.

    Q.3. Illegal cannabis operations pose a serious public health
    risk. A study from the New York Medical Cannabis Industry
    Association found that 40 percent of cannabis products from
    illicit stores in New York City contained harmful contaminants,
    such as E. Coli, lead, and salmonella.
        Will allowing legitimate marijuana businesses, which abide
    by State and local health and safety regulations, access to
    banking and insurance services mitigate some of these safety
    concerns?

    A.3. UFCW has experience in well-regulated industries, like
    meat processing. We know that treating cannabis as a regulated,
    age-restricted, legal consumer product will protect the
    industry and its workers. Operating in a legal gray area is not
    good for consumers, workers, and businesses.
        Currently legal cannabis businesses have the oversight and
    accountability of any other business, without all of the
    financial tools and resources. Cannabis-related businesses
    should have access to conventional financial services and the
    oversight that comes with it, so that the businesses, as well
    as the workers, will have the tools to ensure a safe product
    and safe working environment.
                                    ------

                    RESPONSE TO WRITTEN QUESTION OF
                 SENATOR FETTERMAN FROM ADEMOLA OYEFESO

    Q.1. I have heard stories from union members and leaders who
    have significant safety concerns about working conditions in
    cannabis-related businesses. Can you elaborate on this and
    speak to potential solutions to their concerns?

    A.1. Cannabis workers throughout the industry chain are exposed
    to a large number of hazards and risks--many of which are still
    not fully known. Cannabis employees work with high-intensity UV
    lights that can harm skin and eyes; with CO2 and
    other gases which become poisonous without constant monitoring;
    and with pesticides and other chemicals. Cannabis employees are
    also exposed to mold, heat stress, dust, aerosols, flammable
    solvents, toxic gases, and other volatile chemicals and fire
    hazards. Finally, workers risk physical safety when their place
    of business is cash only, making them a greater target for
    crime.
        As for solutions, Congress should ensure that the highest
    possible workplace safety standards are set in this industry.
    Congress should:

        Allow OSHA to immediately start work on a national
            workplace safety standard for legal cannabis business,
            using the regulations set by California as a model.

        Fund longitudinal studies on the long-term effects
            of exposure to the chemicals involved with growing,
            processing, and selling cannabis.

        Give the Department of Agriculture the ability to
            set standards for the use of pesticide application.

        Pass SAFE Banking to protect cannabis workers and
    businesses from the violent crime all cash businesses attract.
                                    ------

              RESPONSE TO WRITTEN QUESTION OF CHAIR BROWN
                            FROM CAT PACKER

    Q.1. Ms. Packer, when small cannabis businesses do find banks
    and credit unions that are willing to provide financial
    services to them, they sometimes have to pay exorbitantly high
    fees and encounter other barriers. Can you talk about why this
    is and how it can impact small cannabis businesses and their
    workers?

    A.1. Response not received in time for publication.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
                    SENATOR MENENDEZ FROM CAT PACKER

    Q.1. Under current law, State authorized cannabis business are
    not only locked out of the banking system, they are unable to
    obtain necessary insurance products such as workers
    compensation, property, casualty, and title insurance. This is
    a problem that needs to be fixed in order to ensure these
    businesses have access to the full range of financial services
    they need to run a business.
        Does lack of access to insurance negatively impact or even
    outright prevent business owners from obtaining bank financing?

    A.1. Response not received in time for publication.

    Q.2. According to estimates from cannabis data firm New
    Frontier Data, the national market for illicit marijuana is
    worth around $60 billion, twice as much as the legally
    regulated market.
        What are the consequences for legally operating businesses
    when a large portion of the market is operating illegally?

    A.2. Response not received in time for publication.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
                   SENATOR FETTERMAN FROM CAT PACKER

    Q.1. The SAFE Banking Act is a crucial first step, but it can't
    be the last. What do you see is the next step towards
    legalization after the SAFE Banking Act?

    A.1. Response not received in time for publication.

    Q.2. I believe expungement is crucial. Too many Americans have
    had their lives derailed because of a nonviolent marijuana
    conviction. My understanding is that even if the SAFE Banking
    Act were to pass, there would be potential problems when it
    comes to business owners who have previously been convicted of
    marijuana-related charges having access to financial services--
    even if these charges have been expunged. Can you speak more to
    this potential problem? And what we can do to prevent it?

    A.2. Response not received in time for publication.
                  Additional Material Supplied for the Record

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