A key committee in the U.S. House voted to ease access to much-needed banking services for the cannabis industry.
The Secure and Fair Enforcement (SAFE) Banking Act, originally authored by Rep. Ed Perlmutter (D-Colo.) and Rep. Denny Heck (D- Wash.), offers a safe harbor to banks that choose to provide services to legitimate cannabis businesses.
Since cannabis is still considered a dangerous and illegal drug under federal laws, even industries that are legal on the state-level are subject to strict financial regulations. Banks fear that if they run afoul of the law, they could incur massive fines, or be charged with money laundering and racketeering, or even lose their federal charter.
Those banks that do choose to offer services to the cannabis industry are subject to onerous reporting requirements that ultimately wouldn’t protect them should the federal government choose to crack down.
“The regulators are aware that they’re doing it, but if someone chooses to enforce the federal law the way it is now, there could be very severe penalties, because, basically, you’ve committed money laundering,” Colorado Bankers Association COO Jenifer Waller told Cheddar. “Fundamentally the federal law has not changed and you are operating afoul of the federal law.”
Marijuana businesses that lack access to banking services have been forced to mostly operate in cash, employing armored vehicles and private security companies to ensure the safety of their employees and customers. Even with extra support, cannabis stores and medical dispensaries in states like Michigan and Colorado have fallen victim to smash-and-grab robberies from criminals who know the businesses have cash and valuable product on-hand.
The House Financial Services Committee passed the SAFE Banking Act, or H.R. 1595, 45-15 in a vote that capped two days of amendments and deliberation. Vocal opponents of the bill, including Rep. Patrick McHenry (R-NC) and Rep. Blaine Luetkemeyer (R-MO), argued proponents were "putting the cart before the horse" by attempting to provide banking services to businesses before changing the underlying law that criminalizes marijuana possess and distribution.
"The issue at the root of this is the Controlled Substances Act. Marijuana is a controlled substance and providing banking services is illegal," Luetkemeyer said during markup on Wednesday.
But as Perlmutter pointed out, neither McHenry nor Luetkemeyer would likely favor changing cannabis' scheduling under the Controlled Substances Act.
Supporters of the bill praised its passage through committee as a necessary first-step on the road to legitimization for many cannabis businesses, whose owners have felt sidelined by lack of banking access.
“Getting blanket access to banking for all cannabis businesses is the first step in enabling legitimate B2B commerce and professionalizing the industry. We've always believed that companies in our space are entitled to the same resources as those in any other industry,” Doug Gordon, executive vice president of the online cannabis marketplace LeafLink, said in a statement on Thursday.
Despite its success in committee, the bill still has a ways to go. Now that it has passed through the House Financial Services Committee, it must pass a general vote on the House floor. A spokesperson for House Majority Leader Steny Hoyer said the vote had not yet been scheduled. In a statement Perlmutter said introduction of a Senate companion bill is expected within the coming weeks.
Should the SAFE Banking Act ultimately become law, Waller said she anticipates it functioning more as a comfort for banks that currently are or are considering serving the cannabis industry rather than a greenlight for entry.
“I don’t think it will be a floodgate [because] there are still some challenges,” she said. “I don’t think it solves all problems, but it paves the way to get other problems solved.”