Reps. Lee and Blumenauer Request Data on Financial Service Equity for Minority Cannabis Businesses
Washington, DC – Today, Representatives Barbara Lee (CA-13) and Earl Blumenauer (OR-03) sent a letter to the Financial Crimes Enforcement Network (FinCEN) requesting recent data on the financial services offered to minority cannabis businesses in an effort to better understand the barriers faced by minority cannabis businesses owners.
Minority cannabis entrepreneurs often cite a lack of access to capital and financial services as a major barrier to entering the legal cannabis industry. A 2021 Brookings Institution report revealed that Black-owned businesses faced more disparities in access to banking services and deposits, mortgage credit, and small business loans than their white counterparts. These alarming findings were further substantiated by a 2021 Federal Reserve report that found that Black and Latino-owned businesses were less than half as likely as their white counterparts to be fully approved for loan applications.
“As momentum for marijuana decriminalization continues, FinCEN data could help shed light on the state of minority-owned and small cannabis businesses (which constitute businesses with revenues under $40 million) seeking financial services,” the lawmakers wrote. “Existing disparities in access to capital and financial services for individuals and businesses increase financial barriers and exacerbate the racial wealth gap, further harming those most harmed by the failed War on Drugs.
They continued, “Given the increasing momentum of cannabis legalization and much-needed clarity from the federal government, Congress must devise a federal solution to equitably end the cannabis prohibition and encourage industry growth. As we work to invest in the communities disproportionately harmed in the failed War on Drugs, FinCEN data on access to financial services could help promote equitable access to financial services for small and minority-owned cannabis businesses.
“We welcome the opportunity to work with FinCEN to ensure Congress is equipped with the critical data needed to effectively address equity concerns when crafting solutions to end the federal cannabis prohibition.”
Representatives Lee and Blumenauer serve as the Democratic Co-Chairs of the Congressional Cannabis Caucus.
The full text of the letter is copied below.
Himamauli Das, Acting Director Financial Crimes Enforcement Network (FinCEN) 2070 Chain Bridge Road
Vienna, VA 22182
Acting Director Das:
Thank you for your leadership and the work the Financial Crimes Enforcement Network (FinCEN) is doing to effectively safeguard the financial system. As momentum for marijuana decriminalization continues, FinCEN data could help shed light on the state of minority-owned and small cannabis businesses (which constitute businesses with revenues under $40 million1) seeking financial services.
Specifically, we request data on the number of depository institutions that provided financial services to cannabis businesses, as well as a financial analysis and demographic breakdown of cannabis businesses that received banking and other financial services in 2021. As the primary government entity charged with collecting and analyzing financial intelligence2, FinCEN data would help inform federal efforts around equitably ending the racist cannabis prohibition.
As you know, the Controlled Substances Act, the Bank Secrecy Act, and other anti-money laundering statutes restrict licensed cannabis businesses from accessing critical banking services3. Despite the cannabis industry’s growth and maturity, financial institutions that provide banking services to cannabis businesses risk criminal prosecution. Existing disparities in access to capital and financial services for individuals and businesses increase financial barriers and exacerbate the racial wealth gap, further harming those most harmed by the failed War on Drugs.
A 2021 Brookings Institution report revealed that Black-owned businesses faced more disparities in access to banking services and deposits, mortgage credit, and small business loans than their white counterparts4. These alarming findings were further substantiated by a 2021 Federal
Reserve report that found that Black and Latino-owned businesses were less than half as likely as their white counterparts to be fully approved for loan applications5. Predictably, minority cannabis entrepreneurs often cite a lack of access to capital and financial services as a major barrier to entering the legal cannabis industry.
Given the increasing momentum of cannabis legalization and much-needed clarity from the federal government, Congress must devise a federal solution to equitably end the cannabis prohibition and encourage industry growth. As we work to invest in the communities disproportionately harmed in the failed War on Drugs, FinCEN data on access to financial services could help promote equitable access to financial services for small and minority-owned cannabis businesses.
FinCEN data could serve as a baseline for informing efforts around the creation of cannabis equity programs. For instance, data from FinCEN could aid marijuana decriminalization efforts and help determine how revenue collected by the government could be reinvested into small and minority-owned cannabis businesses.
We welcome the opportunity to work with FinCEN to ensure Congress is equipped with the critical data needed to effectively address equity concerns when crafting solutions to end the federal cannabis prohibition.
Sincerely,
Barbara Lee
Member of Congress
Earl Blumenauer
Member of Congress
1 Hait, Andrew W. “The Majority of U.S. Businesses Have Fewer than Five Employees.” Census.gov, 30 Mar. 2022,
https://www.census.gov/library/stories/2021/01/what-is-a-smallbusiness.
html#:~:text=It%20defines%20small%20business%20by,of%20%2416.5%20million%20or%20less.
2 “What We Do.” What We Do | FinCEN.gov, https://www.fincen.gov/what-we-do.
do#:~:text=FinCEN's%20mission%20is%20to%20safeguard,strategic%20use%20of%20financial%20authorities.
3 Packer, Title, Crockett & Dawson, Not a SAFE Bet: Equitable Access to Cannabis Banking, An Analysis of the
SAFE Banking Act, OSU Moritz Col. of Law Drug Enf. & Pol. Ctr. (August 2022).
4 Broady, McComas, and Ouazad. “An analysis of financial institutions in Black-majority communities: Black
borrowers and depositors face considerable challenges in accessing banking services.” The Brookings
Institution, November 2, 2021.
considerable-challenges-in-accessing-banking-services/
5 Small Business Credit Survey - IHCC Illinois Hispanic Chamber of Commerce. https://ihccbusiness.net/wpcontent/
uploads/2021/03/IHCC_REPORT_FED_BANKS.pdf. (n.d.). Retrieved October 17, 2022,
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Congresswoman Lee is a member of the House Appropriations Committee and Chair of the Subcommittee on State and Foreign Operations. She serves as Co-Chair of the Steering & Policy Committee, former Chair of the Congressional Black Caucus, Chair Emeritus of the Progressive Caucus, Co-Chair of the Congressional Asian Pacific American Caucus Health Task Force, and Co-Chair of the Pro-Choice Caucus. She also serves as Chair of the Majority Leader’s Task Force on Poverty and Opportunity. As a member of the House Democratic Leadership, she is the highest ranking Black woman in the U.S. Congress.