As votes continue to be counted in a fierce presidential election, tally on Wednesday showed cannabis legalization and interest rate caps on consumer loans remain popular even in Republican-leaning states. .
In other state-level results that have implications for the financial services industry, Californians have passed a voting measure that will strengthen the country’s toughest consumer data privacy regime, and voters in three states. approved initiatives to legalize sports betting.
The results are in line with voting trends in the recent US election. The legalization of cannabis has proven to be a political winner with voters of all ideological backgrounds, and they have taken a similar hands-off stance on sports betting.
But Americans have not shown libertarian tendencies on all subjects. Bans on consumer loans with high annual rates, for example, have worked well with voters.
Below is an overview of what Tuesday’s results mean for banks and other financial service providers.
Voters in New Jersey, Arizona, South Dakota and Montana approved recreational cannabis use on Tuesday, bringing the number of states that have legalized adult marijuana use to 15.
Additionally, South Dakota and Mississippi have legalized medical cannabis, leaving only 13 states where the drug remains illegal under all circumstances.
“These state-level victories will mean tens of thousands of arrests and fewer new jobs, much-needed tax revenue and increased public safety,” Aaron Smith, CEO of the National Cannabis Industry Association, said in a statement. hurry. “There is still a lot of work to be done, but the wind is behind us. “
The state-level findings could have implications for federal policy, which still criminalizes marijuana and is the main reason many banks remain reluctant to do business with the cannabis industry. Despite bipartisan support on Capitol Hill, bills designed to provide greater convenience to banks failed to secure a vote in the Republican-led Senate.
But if Sen. Mitch McConnell remains the majority leader – which seems likely, although several races have yet to be called – he could face increased pressure from his GOP colleagues to tackle. to cannabis banks.
Senator John Thune, House Republican No. 2, represents South Dakota, where 53 percent of voters supported recreational cannabis and 69 percent of voters adopted medical marijuana.
Meanwhile, the growing size of the U.S. cannabis market should be factored into the decision-making of banks, credit unions, and payment companies weighing the potential costs and benefits of participating. The voting initiatives that were adopted on Tuesday will add $ 9 billion in new revenue for the cannabis industry between 2022 and 2025, according to New Frontier Data.
Games of chance
Maryland, South Dakota and parts of Louisiana joined a growing list of states that have legalized sports betting on Tuesday night.
Some major banks, including JPMorgan Chase, Bank of America and Capital One, are still blocking debit and credit card transactions on certain sports betting apps despite a groundswell in the business, according to the gaming site. FanDuel. The concern is that these sites can be used for money laundering, and banks don’t want to get in trouble with federal regulators and prosecutors for unintentionally facilitating the funnel.
As banks are more open to clearing in-person betting transactions, the hope in the gaming industry is that as more states legalize sports gambling, more and more of financial companies will allow their cards to be used for online betting.
In Louisiana, several parishes around New Orleans approved the sports betting proposal, although state lawmakers must write rules and regulations before bets can be made, as is the case in Maryland and South Dakota.
After Tuesday’s results, 25 states have legalized sports betting in the two years since the Supreme Court authorized the action, according to the American Gaming Association, which is in talks with banks to allow more transactions. . Five of those states have used the ballot box to legalize sports betting.
Nebraska became the latest state to cap annual percentage rates on payday loans at 36%, with voters approving a voting measure by a whopping 83% to 17% margin.
Payday lenders charged average annual percentage rates of 404%, according to supporters of the measure, which included various nonprofits.
“Now everyone in Nebraska will have better access to fair and reasonable credit,” said Kate Wolfe, campaign manager for Nebraskans for Responsible Lending, Recount the Omaha World-Herald Tuesday.
Kent Rogert, a lobbyist for the Nebraska Financial Services Association, which represents payday lenders, told the newspaper his group will be reviewing its legal options this week.
Nebraska’s vote is the latest in a series of recent state-level setbacks for the payday loan industry. In neighboring South Dakota, voters approved a similar measure in 2016. Colorado, Virginia, Ohio and Montana have also passed laws designed to curb high-cost lenders.
If Joe Biden emerges from the hotly contested presidential race victorious, payday lenders could also face further restrictions from the Consumer Financial Protection Bureau, which decided under the Trump administration to scale back Obama-era efforts. to set up federal rules.
Confidentiality of consumer data
In the country’s largest state, supporters of a data privacy voting measure declared victory after partial results showed they held a sizable lead. As of Wednesday morning, the measure held a 56% to 44% lead, according to the California Secretary of State’s office.
“I look forward to ushering in a new era of consumer privacy rights,” Andrew Yang, the former Democratic presidential candidate who chairs the Californians for Consumer Privacy advisory board, said in a press release . “This is going to sweep the country and I am grateful to Californians for setting a new, higher standard for the way our data is handled.”
The ballot measure is based on a revolutionary data privacy law that California passed just two years ago. The new law will create a state agency to serve as a privacy watchdog and provide more rights for consumers, including the right to correct inaccurate personal information and the right to refuse advertisers’ use of data. precise geolocation.
The new law also plans to create a series of compliance jobs for banks, although the industry will retain an exemption for personal information collected, sold or disclosed in accordance with the Gramm-Leach-Bliley Act, a federal law of 1999.
Banks and credit unions that operate in California have already invested significant time and money to comply with the 2018 law. Financial industry lawyers have said the latest measure, most of which will come into effect on January 1, 2023, will require more investment.