There’s big news for marijuana banking! After months of deliberations, the U.S. House of Representatives met on February 27, 2022, to formally attach marijuana banking reform to a large-scale bill focused on innovation and manufacturing. It’s a major victory for the House bill on marijuana, which has been beset with amendments and delays.
Known formally as the Secure and Fair Enforcement (SAFE) Banking Act, the House bill marijuana businesses are backing could provide a lifeline of financial services to many struggling dispensaries and growers. The bill has widespread, bipartisan support. Indeed, Colorado Democrat Ed Perlmutter and Ohio Republican Dave Joyce co-sponsored the legislation, believing it would open access to basic financial services, like checking accounts, for numerous cannabis-related businesses.
In this article, we’ll discuss the background of the marijuana House bill, why it’s been delayed, and what it means for the marijuana industry going forwards.
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Despite widespread legalization across many U.S states – be it for medicinal or recreational purposes – marijuana remains a Schedule I illegal substance federally. Such confusion about marijuana’s legal status has led much of the financial industry to shun cannabis-related businesses.
Unable to access even basic banking services, companies often find themselves overwhelmed by cash. For criminals and fraudsters, it’s a highly lucrative target. In fact, numerous cannabis-related businesses have hired armored vehicles to transfer cash to banks or else store the cash on the property.
But the decision to keep operations cash-only has led to an uptick in robberies and other crimes.
“We need to bring some sense to what is really dangerous right now in this space that so many states allow for dispensaries, for grow problems,” Perlmutter argued. “There’s just a lot of cash, and that cash can really pose problems.”
As part of the marijuana House bill, the SAFE Banking Act is set to change these standards. No longer will banks and other financial institutions be penalized by federal banking regulators for the association with marijuana-related businesses. This could open financial services to dispensaries and growers, further fueling the booming industry.
To call this House bill on marijuana challenging would be an understatement. In late February, the House Bill marijuana vote attached the SAFE Banking Act to a bigger bill, known as the COMPETES Act. But it’s not the first time Perlmutter tried to attach the marijuana bill to another piece of legislation.
In April 2021, a marijuana House bill passed by a vote of 321 to 101 after being first introduced in May 2017. The American Bankers Association, representing the $17 trillion banking industry, testified to Congress supporting the 2021 bill alongside other major banks. Meanwhile, the National Association of Attorneys General (NAAG) wrote to Congress in May 2019, urging the passing of the SAFE Banking Act.
The marijuana House bill should be a slam dunk given the far-reaching support. Instead, partly due to the bills it was attached to, this House bill on marijuana banking reform has been beset by delays.
A last-ditch attempt at the end of 2021 to include the bill as part of the National Defense Authorization Act didn’t survive the conference process.
Going forwards, neither Joyce nor Perlmutter is sure if their provision will remain in the final package. Major Democrats, like Senate Majority Leader Chuck Schumer and New Jersey Sen. Cory Booker, both raised concerns about the marijuana House bill. But, as Joyce and Perlmutter point out, banking reform need not negatively impact efforts on changing tax codes, changing the criminal justice approach to marijuana, or fully legalizing the plant.
“Our philosophy has been that you need to have something to break the ice. And in the Senate, they haven’t had a hearing on cannabis – maybe one half-hearted one – since 1971, much less legislation, much less the votes,” Perlmutter said. “So, our job is to familiarize them with the subject and to get them to take some action.”
Considering the troubled history of the House bill, marijuana reform will likely be an incremental process. After all, even if the bill was broadened, it’s likely to cause many to change their vote.
The victory in late February is no guarantee of future success. It is a step forward in the Federal government’s approach to the subject, however. Still, the amendment to the COMPETES Act was a big hurdle – with 180 co-sponsors, including 26 Republicans.
The Senate previously passed a related version of this Chinese innovative bill, but without any marijuana banking language. The next round of bicameral negotiations will decide the fate of this House bill. Marijuana-related businesses eagerly await the result, but it’s not the end even if it fails.
Perlmutter vowed to add the amendment to “every single bill I possibly can until it’s passed” when speaking to a Rules Committee hearing. But problems may arise from within his own party’s ranks.
Schumer, as mentioned, wants additional provisions added to benefit communities most impacted by prohibition. Such recommendations riled many lawmakers, who see the bill as passable and bipartisan in nature. Even Rep. Rand Paul (R-KY) was left confused as to why the bill hadn’t been passed.
With Perlmutter retiring from Congress after this session, the Colorado Representative is determined to pass the bill first. For marijuana businesses, it’s now a matter of if not when.
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