Editor’s note: This column ran in the Feb. 15 edition of The Pulse, a weekly BankBeat email sent to subscribers which also includes top stories from the previous week.
At a house party recently, I got to explain the rough contours of why exactly legal pot businesses are almost completely shut out of the banking system. Given how rarely the niche character of this job interests my friends, I was delighted to spend 10 minutes talking about SARs and the Cole Memo.
That conversation sparked a recent debate here at the office about the merits of legalizing marijuana federally. Consensus was unsurprisingly split, reflecting the general viewpoint. I favor legalization; I’ve yet to encounter a convincing argument for why marijuana should be regulated differently than alcohol. I can understand those who disagree, though, and our discussion last week was an amicable exploration of the good and bad that might come from full legalization at the federal level.
One of the things that makes having that conversation in a measured way difficult, however, is just how little data we have. My anecdata says one thing, and someone else’s disagrees. Anecdata is a poor foundation for public policy either way. There are some obvious downsides to ingesting (operating heavy machinery while high is just as bad of an idea as drunk driving), but there are some potential upsides as well, notably around pain management. While we have several field sobriety tests for alcohol impairment and an idea of where to draw the legal limits, there still isn’t a reliable equivalent for THC.
Financial institutions that want to serve the cannabis industry are also caught in the middle. The SAFE Banking Act has notably passed the House multiple times without ever making it to the President’s desk. We’ve now progressed to the SAFER Banking Act, which seems equally as likely to pass in the near term. The potential for full federal legalization appears a distant mirage.
Marijuana’s status as a Schedule I drug certainly puts dampers around the amount and kinds of research being conducted. In the absence of Federal-level data, we’ll be forced to draw on state-level findings. Some states have a decade of legalization at this point, and Minnesota just released a report tracking changes in usage in the first year since we stumbled into legalizing THC edibles in summer 2022.
If we’re going to have real debates about how or whether to legalize marijuana, we’re going to need better data. Friendly happy hour conversation isn’t enough to iron out this thorny issue, as much as I enjoyed it. Loosening federal restrictions on researching the impact of the drug — whether good or bad — is a long-overdue step.