Alaska Credit Union to End Cannabusiness Pilot Program Highlighting Need for SAFE Banking Act

According to a report in the Anchorage Daily News, an Alaska credit union plans to discontinue its pilot program to provide checking and savings accounts to marijuana-related businesses.

Anchorage-based Credit Union 1 will end the program August 30 because critical insurance coverage will no longer be available. The credit union launched the program in November to establish financial services for the primarily cash-operated industry.

Recreational marijuana use has been legal in Alaska since 2014.

Cannabusinesses often operate in cash because banks and credit unions are wary of taking on customers whose product is still illegal on the federal level. Credit Union 1 was told by its insurance broker that its insurance coverage would not be renewed because of the credit union’s cannabis banking program.

CUNA and the state leagues have not taken a position on the legalization of marijuana, but support credit unions’ ability to serve their members. In states where marijuana is legal for medicinal or recreational purposes, credit union members engaged in this market have difficulty accessing traditional banking services. The public safety risk continues to grow among credit unions and communities at large due to the lack of access to banking services. 

Eighteen state and two territorial governors added their names to a letter urging Congress to pass legislation to enable financial institutions to provide banking services to state-licensed cannabis businesses. Gov. Phil Murphy was among the twenty signatories on the letter sent to U.S. Senate and U.S. House leadership, and the chairs and ranking members of the Senate Banking and House Financial Service committees. 

NJ Attorney General Gurbir Grewal, NJ Commissioner of Banking & Insurance Marlene Caride and NJ State Treasurer Elizabeth Maher Muoio have also added their names to colleague letters sent to Congress.

 The House version of the Secure And Fair Enforcement Banking Act of 2019, or SAFE Banking Act (H.R.1595) passed the Financial Services Committee in March with a bipartisan 45-15 vote. The measure currently has 206 cosponsors including eight from New Jersey, Reps. Donald Norcross (D-1), Jeff Van Drew (D-2), Tom Malinowski (D-7), Bill Pascrell, Jr. (D-9), Albio Sires (D-9), Donald Payne, Jr. (D-10), Mikie Sherrill (D-11) and Bonnie Watson Coleman (D-12).

The Senate SAFE Banking Act (S.1200) has 31 cosponsors including Sen. Bob Menendez (D-NJ).

Menendez has also introduced the Clarifying Law Around Insurance of Marijuana, or CLAIM Act (S.2201) to address concerns of insurance providers.  

Medicinal marijuana is legal in New Jersey. While efforts to legalize recreational use stalled earlier this year, there is some indication the legislature may revisit it before year’s end. Gov. Murphy has been a vocal supporter of legalizing adult recreational use of marijuana and is expected to sign the legislation if it reaches his desk.