A bill to give cannabis operators access to common banking services will not see a vote in the US Senate this summer, according to media reports, despite the hopes of Democratic leaders and businesses in the regulated marijuana industry.
Don Murphy, a lobbyist with the Marijuana Leadership Campaign, revealed on social media on July 20 that Ohio Democratic Sen. Sherrod Brown, the chair of the Senate Banking Committee, told him that the legislation, known as the Secure and Fair Enforcement (SAFE) Banking Act, wouldn’t receive a markup hearing this week as expected. Without the hearing, which gives lawmakers the opportunity to offer amendments to the bill, the legislation is unlikely to receive a floor vote in the Senate before the summer recess on July 31, delaying passage of the measure until this fall at the earliest. The Senate is slated to return from recess on September 5.
“Time to make early vacation plans Twitter friends,” Murphy tweeted on July 20 “Chairman Brown on the prospect of a #SAFEBanking vote, ‘Not next week.’”
If passed, the SAFE Banking Act would give cannabis businesses operating legally under state law access to traditional banking services by barring federal banking regulators from prohibiting, penalizing or discouraging financial institutions from providing such services. The bill provides similar protections for associated businesses providing services to state-legal cannabis operators, such as attorneys and property owners.
The legislation also prohibits federal banking regulators from terminating or limiting a bank’s federal deposit insurance because the bank is providing services to legal cannabis businesses. Regulators would also be barred from recommending or incentivizing banks to halt or reduce services to companies in the cannabis industry or taking any action on a loan to an owner or operator of a cannabis-related entity.
Cannabis Industry Operates Largely In Cash
Under current federal statutes, financial institutions that provide services to legal cannabis businesses face strict regulatory and reporting requirements put in place to prevent money laundering. As a result, few banks will serve the regulated cannabis industry and businesses are forced to operate largely in cash, making businesses, their customers and their employees more vulnerable to crimes, including armed robbery.
Originally introduced in 2019, the SAFE Banking Act also provides a safe harbor from criminal prosecution, civil liability and asset forfeiture for financial institutions that provide banking services to cannabis businesses, including the banks’ officers and employees. For the first time, the most recent version of the legislation extends similar safe harbor protections to Community Development Financial Institutions (CDFI) and Minority Depository Institutions (MDI), which serve underserved communities that face challenges in accessing capital and provide affordable access to financial services, to ensure they can also serve cannabis businesses.
Ohio Rep. Dave Joyce, the lead Republican sponsor of the legislation in the House, noted in a statement to Marijuana Moment on Thursday that his chamber of Congress “has passed the SAFE Banking Act seven times with strong bipartisan support.”
“I am disappointed to see continued delays in the upper chamber and strongly encourage my colleagues in the Senate to act swiftly on this critical legislation,” he added.
Ten-Year Anniversary of Cannabis Banking Legislation
Congress first considered legislation to give state-legal cannabis businesses access to banking services a decade ago with the introduction of 2013’s Marijuana Businesses Access to Banking Act from former Rep. Ed Perlmutter (D-CO). The legislation has strong bipartisan support in both houses of Congress but has failed to gain traction with leadership in the Senate after success in the House several times over the past decade.
“The ten-year anniversary of the first introduction of the SAFE Banking Act is an inauspicious one,” Morgan Fox, political director of the National Organization for the Reform of Marijuana Laws (NORML), said in a statement. “It’s frustrating that after such a long time—and after this narrowly-tailored commonsense reform has been repeatedly approved in the people’s chamber—its forward movement in the Senate remains in question.”
Brett Gelfand, the CEO Of CannaBIZ Collects, a cannabis collection agency representing more than 800 cannabis and CBD clients, said that the latest delay for the SAFE Banking Act will hinder the growth of the industry because most financial institutions will continue to refrain from providing banking services and extending credit to cannabis businesses. The ongoing lack of financial services could have further repercussions in the cannabis industry, he said, if the lack of capital causes cannabis businesses to curtail extending credit to each other.
“One unexpected upside of SAFE Banking not passing is that it might force the cannabis industry to finally tighten credit and collection policies,” Gelfand says. “As most banks won’t extend credit facilities to cannabis companies, it’ll force the companies to be more selective in who they offer trade credit to, and the terms under which they offer this credit. This hopefully will lead to better credit and collection policies across the board.” (Full Story)