Colorado Congressman Ed Perlmutter is sponsor of the Safe Banking Act, which would allow marijuana based businesses to use the ban...READ MORE
Bipartisan State Attorneys General Urge Congress To Pass Marijuana Banking Bill
Washington, D.C.-, April 2, 2021
Tags: Jobs & the Economy
Three state attorneys general and the top prosecutor for Washington, D.C. sent a letter to congressional leaders on Thursday, reiterating their support for legislation that would protect banks that service state-legal marijuana markets from being penalized by federal regulators.
Rep. Ed Perlmutter (D-CO) is the chief sponsor of the Secure and Fair Enforcement (SAFE) Banking Act in the House, while Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT) are carrying their chamber’s version. Both were reintroduced with substantial bipartisan cosponsor lists last month.
Colorado Attorney General Phil Weiser (D) led the new letter, which says that the signatories support the proposal and “encourage Congress to take action expeditiously.”
“Without access to traditional financial services, [state-legal marijuana businesses] operate exclusively or primarily in cash, making those businesses targets for criminal activity and hindering efforts to ensure regulatory and tax compliance and track financial flows,” they wrote. “This status quo—a rapidly expanding, multibillion-dollar national marketplace without access to the national banking systems—is untenable.”
The Republican attorneys general of North Dakota and Ohio, as well as the Democratic attorney general of Washington, D.C., joined Weiser in signing the letter. It’s similar to a message that 34 top state prosecutors sent to congressional leadership in 2020.
“To address an untenable status quo and recognize on the ground realities, we strongly urge the House of Representatives and Senate to promptly take up and act upon the SAFE Banking Act,” the new letter says. “Our states’ ability to protect public safety and properly regulate this new and growing industry depends on Congress enacting this vital legislation.”
The House did pass the marijuana banking bill last Congress, but it did not advance in the Senate under Republican control. Democratic leaders also included the proposal as part of two COVID-19 relief bills.
The SAFE Banking Act would ensure that financial institutions could take on cannabis business clients without facing federal penalties. Fear of sanctions has kept many banks and credit unions from working with the industry, forcing marijuana firms to operate on a cash basis that makes them targets of crime and creates complications for financial regulators.
After it passed the House last session, advocates and stakeholders closely watched for any action to come out of the Senate Banking Committee, where it was referred after being transmitted to the chamber. But then-Chairman Mike Crapo (R-ID) did not hold a hearing on the proposal, despite talk of negotiations taking place regarding certain provisions.
Crapo said he opposed the reform proposal, but he signaled that he might be more amenable if it included certain provisions viewed as untenable to the industry, including a 2 percent THC potency limit on products in order for cannabis businesses to qualify to access financial services as well as blocking banking services for operators that sell high-potency vaping devices or edibles that could appeal to children.
Sen. Sherrod Brown (D-OH), who took the top seat in that panel after Democrats secured a majority in the Senate, told reporters in February that he’s “willing” to move the cannabis banking bill, “but with it needs to come sentencing reform.”
“I don’t think we move on legalization the way that Colorado and some other states want us to, unless we really look more seriously at who’s in prison for how long for those kinds of offenses and we don’t do one without the other,” he said.
The committee’s ranking member, Sen. Pat Toomey (R-PA), said in November that he is “open to working with my colleagues on how we could enable businesses that are operating legally in their respective states to be able to have ordinary banking services” and that it’s “something we should work on.”
At the end of the last Congress, the prior Senate version of the SAFE Banking Act had garnered a total of 35 senators signed on, including now-Vice President Kamala Harris.
When legislative leaders announced that the SAFE Banking Act was getting a House vote in 2019, there was pushback from some advocates who felt that Congress should have prioritized comprehensive reform to legalize marijuana and promote social equity, rather than start with a measure viewed as primarily friendly to industry interests.
Rep. Earl Blumenauer (D-OR), co-chair of the Congressional Cannabis Caucus and an original cosponsor of the bill, said last month that the plan is to pass the banking reform first this session because it “is a public safety crisis now,” and it’s “distinct—as we’ve heard from some of my colleagues—distinct from how they feel about comprehensive reform.”
Meanwhile, congressional lawmakers are simultaneously preparing to introduce legislation to end federal cannabis prohibition.
Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) are in the process of crafting a legalization bill, and they’ve already met with advocates to get feedback on how best to approach the policy change. Wyden is the only member of the trio to be listed as an original cosponsor of the new SAFE Banking Act.
Schumer said this week that they will be introducing the legalization bill “shortly.”
House Judiciary Chairman Jerrold Nadler (D-NY) also recently said that he would be reintroducing the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act, which would federally deschedule cannabis and contains a number of social equity provisions. That proposal passed in the House last year.
As more states have legalized marijuana for recreational or medical use, financial institutions have relied on 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that requires them to submit suspicious activity reports if they elect to provide financial services to cannabis businesses. In the years since, the number of depositories taking on marijuana clients has gradually increased—until a more recent downward trend that now seems to be stabilizing.
The head of the Internal Revenue Service (IRS) told Congress in February that the federal agency would “prefer” for state-legal cannabis firms to be able to pay taxes electronically, as the current cash-based system under prohibition is onerous and presents risks to workers.
Former Treasury Secretary Steven Mnuchin similarly said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue, and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.Content originally published by Marijuana Moment on April 2, 2021.