A bill to get cannabis industry cash off the streets and into bank accounts will get its first markup on March 26 in the House Financial Services Committee as the measure continues to pick up Republican support.
The SAFE Banking Act (H.R. 1595) has 138 bipartisan co-sponsors as of March 19, with more expected to join later this week, according to a spokeswoman for Rep. Ed Perlmutter (D-Colo.), one of the original co-sponsors along with Rep. Denny Heck (D-Wash.). The pair reintroduced the bill on March 7 with two Ohio Republican co-sponsors, Reps. Warren Davidson and Steve Stivers. The bill now has 12 Republican co-sponsors.
With GOP support in addition to strong backing from House Financial Services Committee Chairwoman Rep. Maxine Waters (D-Calif.), the bill is likely to be approved by the committee. The bill’s two original cosponsors are hopeful it could get to the House floor by summer where there’s strong odds of passage, they told Bloomberg Law earlier this month.
Sen. Jeff Merkley (D-Ore.) is expected to introduce companion legislation later this year in the Senate, where prospects are less certain.
Senate Majority Leader Mitch McConnell (R-Ky.) has long supported legalizing industrial hemp, cannabis’ non-psychoactive cousin, but it’s unclear whether he’d allow the SAFE Banking Act to get to the Senate floor. Many industry observers predict a pot banking bill could advance before the 2020 elections when Republicans like Sen. Cory Gardner (Colo.) and Susan Collins (Maine) face reelection in states where some form of cannabis has been legalized.
The legislation championed by Heck and Perlmutter since 2013 is intended to address a major public safety concern and bring a multibillion-dollar industry operating on the sidelines of the financial system into the mainstream.
“After a six-year wait of getting a hearing, having over 100 co-sponsors to this legislation, we feel like today is a really important step forward. But it’s just a step. We have a ways to go and we are not letting up,” Heck said.
The two lawmakers said they were confident in their bill but would remain open to changes. “It has to be with the focus of public safety and allowing businesses that are legal within their states to have normal banking relationships,” Perlmutter said.
Heck said they would resist changes that would take the bill’s scope beyond those parameters.
Despite skepticism from some within the House Republican caucus, the support of Republican members like Davidson and Stivers is helping change the conversation and improve prospects for the SAFE Banking Act.
“This isn’t about condoning marijuana businesses, it’s about creating an auditable trail and keeping our neighborhoods safe,” Stivers said in a March 7 statement. Davidson focused on the matter from a civil liberties standpoint. “Barring legally recognized small businesses from our financial institutions threatens the very pillars of liberty and freedom our country was founded on,” Davidson said in the statement.
Davidson’s libertarian approach and Stivers’ view of the issue as a business and public safety matter presage well for passing the bill, Heck said. “I think it’s different than it has been in the past,” Heck said.
The financial services industry has been clamoring for guidance on how to do business with companies that are legal in the majority of states that have approved some form of cannabis product use, but are illegal at the federal level.
Compliance burdens and fear of violating the Bank Secrecy Act have kept the number of financial institutions willing to do business with cannabis companies to an estimated 40, despite burgeoning growth nationwide of cannabis dispensaries, suppliers and other service providers. Afraid of violating federal laws, some financial institutions have had to drop non-cannabis clients, such as real estate companies, accountants or lawyers, that may work with a cannabis company.
The 2019 legislation would protect those supply chain companies from losing their banking services. It also would require the Financial Institution Examination Council, composed of five federal bank and credit union regulators, to develop guidance on how to serve cannabis companies.
Content originally published by Bloomberg Law on March 20, 2019.