Strange bedfellows sign on to a new marijuana banking bill

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Washington, D.C.-, May 18, 2017 | comments

For years, lawmakers have introduced marijuana banking bills that have gone nowhere.

Now, comes a new bill -- this one has the backing of Republican Sen. Cory Gardner and Democrat Sen. Michael Bennet. But it also includes sponsorship from Massachusetts Democrat Sen. Eliabeth Warren and Republican Sen. Rand Paul, of Kentucky.

Called the Secure and Fair Enforcement (SAFE) Banking Act of 2017, its backers say it will solve a key logistical and public safety problem in the states that have legalized medical and recreational marijuana.

“Conflicting federal and state marijuana laws make it difficult for legitimate businesses to use the basic financial services they need access to and this bipartisan legislation gives them that access they need,” Gardner said. “We must also take into account the risk to public safety as these businesses are being forced to carry around bags of money to pay for their employees and rent. Legal businesses should not be treated like this, and I’m glad that Republicans and Democrats are working together to address this issue.”

U.S. Rep. Ed Perlmutter, D-Colorado, and others have introduced marijuana banking bills since 2015. Perlmutter reintroduced the Marijuana Business Access to Banking Act of 2015 last month.

His proposed legislation would remove current legal uncertainty by providing a "safe harbor" and additional civil protections for depository institutions who provide a financial product or service to a covered business, they said. For example, federal banking regulators would not be able to threaten or limit a bank or credit union’s deposit insurance, take any action or downgrade a loan made to a covered business, or force a depository institution to halt providing any kind of banking services to a marijuana-related legitimate business.

Banks have refused the accounts of marijuana-related business over fear of being accused of money laundering and drug trafficking and because banking rules prohibit banking for activities defined as illegal under federal law. The federal government does not recognize state's authority to allow marijuana businesses and considers these businesses illegal.

The Federal Deposit Insurance Corp., for example, is one of three banking regulators that has not issued specific guidance for banks on doing business with the marijuana industry. However, federal law requires banks to report suspicious activity.

The Gardner-backed SAFE proposal would prevent federal banking regulators from:

  • Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business (such as an lawyer or landlord providing services to a legal cannabis business);
  • Terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned cannabis business or associated business;
  • Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
  • Taking any action on a loan to an owner or operator of a cannabis-related business.

The bill also creates a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to legitimate, state-sanctioned cannabis businesses, while maintaining banks’ right to choose not to offer those services.

The bill would require banks to comply with current Financial Crimes Enforcement Network (FinCEN) guidance, while at the same time allowing FinCEN guidance to be streamlined over time as states and the federal government adapt to legalized medicinal and recreational cannabis policies.

Content originally published by the Denver Business Journal on May 18, 2017.
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