Advocates are hopeful that a bill that would allow the financial sector to finally serve cannabis businesses could head to President Trump’s desk by the end of the year.
The House in a strong bipartisan vote last week passed the Secure and Fair Enforcement (SAFE) Banking Act, which would allow banks and financial institutions to work with cannabis businesses. The bill now faces an uncertain future in the Republican-held Senate, with little time left on the legislative calendar and Congress already distracted by funding fights and the House Democratic impeachment inquiry into Trump.
But supporters see growing momentum for the legislation and are hopeful they are nearing the finish line despite challenges. The unusual coalition of financial sector lobbyists, progressive lawmakers, law enforcement officials and cannabis businesses backing the bill cheered the House vote as building momentum for the Senate.
“A strong bipartisan outcome in the House last night means that we have a better chance of getting the Senate’s attention,” Terry Holt, a spokesman for National Cannabis Roundtable and a partner at HDMK, told The Hill after the 321-103 House vote, which saw 229 Democrats, 91 Republicans and one Independent back the bill.
“Because the authors in the House were able to work together in a bipartisan way, the bill did improve to the point where we feel like it can reach the next stage.” Industry groups have long pushed for legislation on the issue.
Banks and credit unions have largely avoided serving cannabis firms because of the legal limbo between federal and state laws. Cannabis is illegal under federal law, but 33 states have legalized medical or recreational use of the drug. Any financial firm that lends to, finances or holds money for a cannabis company or its employees could face steep federal penalties, even in states that have legalized the drug.
Advocates for legalization and a financial services sector eager to tap a fast-growing industry have united behind the SAFE Banking Act. The bill would prohibit federal regulators from penalizing banks or credit unions for serving cannabis businesses that comply with state laws. It’s a top priority for a cadre of powerful financial services lobbying groups, including the American Bankers Association (ABA), the Independent Community Bankers of America and the Credit Union National Association.
The focus is now on the Senate Banking Committee and its chairman, Sen. Mike Crapo (R-Idaho), who has pledged to take action on the issue. While Crapo is personally opposed to marijuana legalization, he told CQ last week that his panel will consider the SAFE Banking Act or a similar bill “as soon as we can.” Supporters of the bill cheered Crapo’s pledge.
“Chairman Crapo indicated he wants to get a cannabis banking bill marked up by the end of the year, and we anticipate it will be similar to the SAFE Banking Act. This week’s historic bipartisan vote in the House undoubtedly builds momentum for Senate action,” said ex-Rep. Carlos Curbelo (R-Fla.), a strategic adviser for the Cannabis Trade Federation. But there are still questions about the depth of GOP Senate support.
While Republicans have eagerly advanced other bills to ease financial sector regulation, GOP senators have shown little interest in grappling with the controversy over cannabis. Only two GOP senators attended a July Banking panel hearing on the bill: Crapo and Sen. Cory Gardner (Colo.), one of only five Republican co-sponsors of the Senate version of the bill.
“It is really important to see what Chairman Crapo proposes,” said a financial services lobbyist advocating for the bill. “We don’t know where his head is on this,” the lobbyist added. “We’re very appreciative of his interest and his support and finding a resolution, but the devil’s really going to be in the details.”
Bill supporters have taken steps to win over Republican backing, in particular from Senate Majority Leader Mitch McConnell (R-KY). The House version included a measure to ease regulations on hemp businesses, a crucial industry in McConnell’s home state of Kentucky. McConnell, who could make or break the measure, helped secure a provision to lift federal penalties on hemp production in the 2018 farm bill.
But McConnell remains a wild card. The Senate leader has also spoken out against legalizing marijuana and called cannabis hemp’s “illicit cousin.”
A spokesman for McConnell declined to comment. Another question mark is President Trump, who has not addressed the issue.
The bill’s supporters, though, say GOP senators will be motived to take action to address the split in federal and state laws and the legal limbo faced by banks. “There is a growing sense of urgency behind resolving the cannabis banking problem because it would greatly improve public safety and increase transparency into the rapidly expanding state-legal cannabis industry,” Curbelo said.
Advocates note that cannabis businesses often deal in cash because they don’t have access to banking. Curbelo said he was confident lawmakers would decide that “this industry deserves the same access to banking services as all others.” Randal Meyer, executive director for a cannabis coalition, Global Alliance for Cannabis Commerce, also touted the SAFE Banking Act to Republicans who don’t want to legalize cannabis.
“The SAFE Banking Act does not legalize cannabis, it solves a narrow and specific public safety and policy question,” Meyer said. But the bill also faces opposition from groups who see it as a step toward legalizing marijuana nationally.
“We’re foolish to think this is the end to the marijuana industry, this is the beginning. To them, this is legalization by the back door because it allows institutional investors to market and promote marijuana, which is their dream,” said Kevin Sabet, former White House Office of National Drug Control Policy adviser and CEO of Smart Approaches to Marijuana, a group opposing legalization.
“We think that banking would be a handout to drug cartels who will exploit and expose U.S. financial systems to their end,” he added. “I don’t think the Republicans want to be the party of transnational criminal organization.”
Still, financial industry groups say they intend to prioritize the legislation this fall and are pushing the Senate to act.
“We believe that the SAFE Banking Act provides a solid foundation,” said James Ballentine, ABA’s executive vice president of congressional relations and political affairs.
“If it were to become law today, it would be extremely helpful.”
This story was originally reported by SYLVAN LANE AND ALEX GANGITANO at The Hill.
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