AG Nesselpushesforcannabisbankingreform

Published in Business and Finance on Friday, July 25th 2025 at 13:05 GMT by 13abc
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The act would allow cannabis businesses access to the regulated banking system.

Michigan AG Dana Nessel Advocates for Federal Cannabis Banking Reform Amid Growing Industry Challenges

In a bold move to address the persistent hurdles facing Michigan's burgeoning cannabis industry, Attorney General Dana Nessel has thrown her weight behind comprehensive federal banking reforms. Speaking at a recent press conference in Lansing, Nessel emphasized the urgent need for legislative changes that would allow financial institutions to serve cannabis-related businesses without fear of federal repercussions. This push comes as Michigan's legal cannabis market continues to expand rapidly, generating billions in revenue while grappling with the limitations imposed by outdated federal laws.

Nessel's advocacy is part of a broader coalition effort involving attorneys general from multiple states where cannabis has been legalized for medical or recreational use. The group has collectively urged Congress to pass measures like the Secure and Fair Enforcement Regulation (SAFER) Banking Act, which aims to bridge the gap between state-level legalization and federal prohibitions. "The current system forces legitimate businesses to operate in the shadows, relying on cash transactions that invite crime and hinder economic growth," Nessel stated. "It's time for federal policy to catch up with the realities on the ground."

The roots of this issue trace back to the federal classification of cannabis as a Schedule I controlled substance under the Controlled Substances Act of 1970. Despite this, 24 states, including Michigan, have fully legalized recreational cannabis, and an additional 14 permit medical use. Michigan voters approved recreational legalization in 2018 through Proposal 1, leading to a thriving industry that now boasts over 700 licensed dispensaries and cultivators. According to state reports, the sector generated more than $3 billion in sales last year alone, contributing significantly to tax revenues that fund education, infrastructure, and public health initiatives.

However, the federal illegality creates a precarious situation for banks and credit unions. Financial institutions risk penalties, including loss of federal deposit insurance or even criminal charges, if they provide services to cannabis businesses. As a result, most banks steer clear, leaving the industry to operate largely on a cash-only basis. This not only complicates everyday operations like payroll and vendor payments but also poses serious safety risks. Nessel highlighted several incidents in Michigan where cannabis dispensaries have been targeted by robbers due to the large amounts of cash on hand. "We're seeing armed robberies, burglaries, and even violence against employees," she noted. "These are preventable tragedies if we had a normalized banking system in place."

Nessel's call for reform isn't isolated; it's echoed by industry leaders, lawmakers, and even some federal officials. The SAFER Banking Act, which has bipartisan support in Congress, would prohibit federal regulators from penalizing banks that work with state-legal cannabis businesses. Proponents argue that this would enhance transparency, reduce money laundering risks, and allow for better tax collection. "By enabling access to banking, we can track funds more effectively and ensure that revenues are properly reported," Nessel explained. She pointed to successful models in states like Colorado and California, where limited banking access has still led to safer operations compared to fully cash-dependent systems.

Beyond safety, the economic implications are profound. Michigan's cannabis industry employs tens of thousands of people, from growers and processors to retail staff and ancillary service providers. Without banking reform, businesses face higher costs for security, insurance, and cash management. Small operators, in particular, struggle to compete with larger entities that can afford sophisticated cash-handling solutions. Nessel stressed the equity aspect, noting that many cannabis entrepreneurs come from communities disproportionately affected by past drug enforcement policies. "This is about justice as much as it is about economics," she said. "We legalized cannabis to right historical wrongs, but without banking access, we're perpetuating inequalities."

The Attorney General's office has been actively involved in related legal battles, including defending Michigan's regulatory framework against federal overreach. Nessel referenced ongoing lawsuits where cannabis businesses seek clarity on interstate commerce and taxation. She also called out the hypocrisy in federal policy, pointing out that while cannabis remains illegal, the U.S. Department of Justice has issued guidance under the Cole Memorandum (though rescinded in 2018) that deprioritized enforcement in compliant states. "If the feds aren't prosecuting these businesses, why punish the banks that serve them?" Nessel questioned.

Support for Nessel's position spans the political spectrum. Republican lawmakers in Michigan, who have historically been cautious on cannabis issues, are increasingly vocal about the need for federal alignment. State Senator Aric Nesbitt, for instance, has co-sponsored resolutions urging Congress to act. On the Democratic side, figures like Governor Gretchen Whitmer have long advocated for comprehensive reform, including potential rescheduling of cannabis at the federal level. Nationally, the push has gained momentum with endorsements from organizations like the American Bankers Association, which sees untapped market potential in serving the industry.

Critics, however, argue that banking reform without broader legalization could create loopholes for illicit activities. Some conservative groups worry about normalizing cannabis use, while others in the financial sector express concerns over compliance costs. Nessel addressed these points head-on, asserting that robust regulations already in place at the state level mitigate such risks. "Michigan has one of the most stringent licensing and tracking systems in the country," she said. "We're not asking for a free pass; we're asking for fairness."

Looking ahead, Nessel plans to continue lobbying efforts, including testifying before congressional committees if invited. She encouraged Michigan residents to contact their federal representatives to support the SAFER Banking Act, which has passed the House multiple times but stalled in the Senate. "This isn't just a Michigan issue; it's a national one," Nessel urged. "States are leading the way, but we need federal partnership to make this industry safe, sustainable, and successful."

The push for cannabis banking reform also intersects with broader discussions on criminal justice reform. Nessel highlighted how cash-only operations exacerbate challenges for expungement programs, as unbanked businesses may struggle with record-keeping required for tax and legal compliance. Moreover, the reform could pave the way for more inclusive financing options, such as loans for minority-owned cannabis ventures, aligning with Michigan's social equity initiatives.

Industry experts predict that if passed, the SAFER Banking Act could unlock billions in economic activity nationwide. For Michigan, it would mean enhanced job creation, increased investment, and reduced public safety burdens. Dispensary owners like those in Detroit and Ann Arbor have shared stories of transporting cash in armored vehicles or hiring private security, underscoring the daily realities Nessel aims to change.

In her closing remarks, Nessel drew a parallel to the end of alcohol prohibition in the 1930s, when federal policy adapted to societal shifts. "History shows us that prohibition doesn't work; regulation does," she said. "By reforming cannabis banking, we're not just supporting businesses—we're building a safer, more equitable future for all."

As Michigan's cannabis market matures, Nessel's advocacy serves as a reminder of the unfinished work in aligning state innovations with federal frameworks. With growing bipartisan consensus, the coming months could see significant progress, potentially transforming the landscape for cannabis businesses across the United States. For now, Nessel remains committed to championing this cause, ensuring that Michigan's legal industry can thrive without the shadows of outdated restrictions.

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AG Nesselpushesforcannabisbankingreform

Michigan AG Dana Nessel Advocates for Federal Cannabis Banking Reform Amid Growing Industry Challenges