By Chloe Aiello

For the first time ever in a Republican-controlled Senate, lawmakers on Tuesday faced the question of easing access to banking services for the cannabis industry and quickly underscored some of the challenges to cannabis law reform.

Six witnesses testified before the bipartisan Banking, Housing and Urban Affairs Committee about the Safe and Fair Enforcement (SAFE) Banking Act in a hearing entitled “Challenges for Cannabis and Banking: Outside Perspectives.”

“This is a difficult hearing, a difficult topic, I know that, but we were sent here to deal with difficult topics, and I am grateful for the opportunity to talk about this today,” said Sen. Cory Gardner (R-Colo.), the bill’s co-sponsor who was called to testify on Tuesday. “It’s an important step forward, the first hearing we've had on this issue as the federal government wakes up to the reality that the cannabis issue is not going to go away and we must have action.”

The SAFE Banking Act has broad support in the House, where it has 206 co-sponsors. It passed through the House Financial Services Committee and is expected to hit the House floor this fall. By contrast, the bill has 31 co-sponsors in the Republican-controlled Senate -- and, aside from the committee chair Sen. Mike Crapo (R-Idaho) and Gardner, only Democratic members attended Tuesday’s hearing.

SAFE Banking is considered one of the most bipartisan approaches to cannabis law reform in Congress, due to its relatively narrow focus on resolving banking issues in states that permit cannabis. 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, be charged with money laundering and racketeering, or even lose their federal charter. Banks and credit unions that do support cannabis businesses are subject to onerous reporting requirements.

Rachel Pross, a witness and chief risk officer of Maps Credit Union in Oregon, said that more than 91 percent of the suspicious activity reports the credit union files are from its cannabis customers. She implored the senators to flesh out guidelines and regulations for banks.

Still, other banks avoid the risk and complication by avoiding the cannabis businesses altogether. This puts companies like LivWell Enlightened Health in Colorado in a unique position: being heavy with cash.

John Lord, CEO of LivWell and a hearing witness, recalled risky times before his company established a consistent banking relationship.

“At one time, I rented out a former bank to use as a vault to store cash. Another time, I had no choice but to walk into the IRS in Denver with $3 million in cash in order to pay federal taxes,” he said. “Imagine running a business in hundreds of employees and having to make all payments, including payroll in cash. It is difficult, and frankly, it's dangerous.”

Garth Van Meter, vice president of government affairs at prominent anti-legalization organization Smart Approaches to Marijuana and a witness at the hearing, emphasized that danger lay in the unknown effects of cannabis, hammering home a common argument that discussing incremental regulatory fixes for the cannabis industry is premature.

“By skipping ahead to a technicality over banking rules, the marijuana industry is hoping to gain many of the benefits of federal legalization without a debate over the public health effects, but make no mistake, a policy change over banking would have massive public health ramifications,” Van Meter argued.

“SAFE Banking will allow the expansion of an industry pushing new exponentially more powerful forms of marijuana before any of its health or societal impacts are fully understood,” he added.

Now that 33 states and Washington D.C. permit medical or recreational cannabis, and an estimated 62 percent of Americans support cannabis legalization, Congress has been forced to come to terms with the tide of public opinion. The Senate hearing comes mere weeks after a hearing in a House Judiciary subcommittee to discuss cannabis legalization and social equity. Plus, there are a variety of cannabis reform bills circulating throughout Congress, including a new one Sen. Kamala Harris introduced on Tuesday to federally decriminalize the plant.

“In a time when all the talk is about how divided we are as a country, we are remarkably united on this issue,” Gardner said.