SPRINGFIELD — Illinois may be the first state in the country to give some state-chartered banks cover as they look to open up to the marijuana industry without risking the ire of regulators.
As of Monday, 33 states and the District of Columbia allow some form of legalized marijuana. But under federal law it’s still illegal, making most banks and credit unions unsure about doing business with growers and dispensaries. Even when the businesses are operating in accordance with state law, the banks are still regulated by the feds, making them reluctant to go against federal rules.
As a result, medical cannabis operators are largely dealing as a cash-only business in Illinois, leaving them unable to open bank accounts and write checks like other legal businesses.
“The inability for the legal cannabis industry in Illinois to use a bank or credit union for basic services such as check writing, savings or access to capital is a sleeping giant,” Illinois State Treasurer Mike Frerichs said.
Flanked by state lawmakers and the head of Illinois State’s Attorneys Association, Frerichs announced his support to update state regulations when it comes to banking and legalized cannabis Monday.
“When you’re dealing with that much cash, the opportunity for criminal activity increases,” said DuPage County States Attorney Robert Berlin. “We are about public safety and that’s what these bills are about.”
Right now, only medical marijuana is allowed in the state of Illinois—but governor JB Pritzker promised to legalize recreational use during his campaign. If that happens, it would mean more cash, and more risk for those operators.
“If we do not make these changes, if we do not bring our rules and regulations in line with our laws and our actions, we invite crime. We invite theft, we invite tax evasion,” Frerichs said. “We invite negative consequences that will lead to the collapse of the legal cannabis industry.”
The sponsors for the bill in Springfield say that’s why it’s important to assure banks – at least some—that it’s okay to open accounts to those operators.
“We have to do this in advance of when the federal government finally gets this right and because it’s happing state by state by state, it’s the one thing we think will make the federal government move,” said IL State Senator (D-40th District) Toi Hutchinson. “We need to do this for the safety of our own business so we can makes sure that people are doing exactly what they need to do for safe, regulated, business operations.”