Policy Guides

The Essential Guide to Cannabis: Financial Services

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Advocates and lawmakers think the Secure And Fair Enforcement (SAFE) Banking Act of 2019 has the best chance of passing in the 116th congress. The bill would prohibit regulators from taking action against financial institutions that provide services to cannabis businesses and safeguard banks in legal states from consequences should one of their clients stray outside the law. As it stands, banking services in states with legal medical or recreational cannabis are scarce or nonexistent. The state of Oregon, for example, has two credit unions that offer banking services to cannabis businesses.

The main argument on Capitol Hill is that the lack of banking increases crime. A Wharton School of Business Public Policy Initiative analysis in 2015 showed that when no banking services are available, 1 in every 2 cannabis dispensaries was robbed. 

The lack of banking is also hurting the industry from an economic standpoint. Starting a business always requires capital up front, and small cannabis business owners don’t have a way to take out a loan or a line of credit. In states like California, licensing and regulatory fees are so high that without banking, the “little guys” often can’t succeed.

Advocates, lobbyists and lawmakers all think this is one of the standalone cannabis bills most likely to pass in this congress. Part of that is because Republicans still control the Senate, and GOP leadership as a whole is not interested in descheduling. Banking, though, can be tied into states’ rights and has backing from powerful outside groups like the American Bankers Association and the Credit Union National Association (CUNA).

House Breakdown

The Bill was introduced by Rep. Perlmutter (D-Colo.) and has 206 cosponsors and counting in the House. It passed the House Banking Committee by 45 to 15 and was discharged by the House Judiciary Committee. Its next step will be a vote on the floor of the House, but it’s currently stuck in that place where other lawmakers are trying to tack on other cannabis-related things now that it seems like it has momentum. It is widely assumed that the bill will pass on the floor of the House, the main hope now is that it passes by enough margin to put pressure on the Senate.

UPDATE: On September 25th, the House passed H.R. 1595 with a vote of 321-103. One Independent and 91 Republicans joined 229 Democrats in supporting the measure. One Democrat and 102 Republicans voted against the bill.

Senate Breakdown

The Senate always seemed like a tougher sell, primarily because it is GOP-led and the committee chairmen in line to consider this legislation don’t come from states with cannabis markets, and therefore no banking issues. But the Senate has begun to consider it, scheduling a hearing in the Committee on Banking, Housing and Financial Services. Some speculate that it’s an issue with enough public support that Republicans in the Senate don’t mind using it to make House Democrats look inept. GOP Senators Cory Gardiner (Colo.), Rand Paul (Ky.) and Kevin Cramer (N.D.) are all supporters or co-sponsors of the bill, and Senator Jeff Merkley (D-Ore.) has said that he thinks if it makes it to a vote on the floor of the Senate, there are the votes to pass it. The bill currently has 31 cosponsors in the Senate, including five Republicans and two Independents. Most cosponsors are from states with medical or recreational cannabis, except Sen. Kaine and Sen. Warner from Virginia and Sen. Baldwin of Wisconsin.

Legislation You Should Know
  • Rohrabacher-Blumenauer Amendment: previously the Rohrabacher-Farr Amendment, this amendment was first passed in 2014, and prohibits the Department of Justice from using federal funds to prosecute medical marijuana businesses that abide by state laws. It must be renewed every congress. 
  • Blumenauer - McClintock Amendment (2019): This amendment, introduced in the 116th congress, would do for recreational cannabis what the Rohrabacher-Blumenauer Amendment does for medical: protect state industries from interference from DOJ.
  • SAFE Banking Act of 2019: if passed, would create federal protections for financial institutions that serve cannabis businesses in states where cannabis is legal.

“Because federal policy currently views handling transactions from legal cannabis businesses as tantamount to money laundering, it’s been extremely difficult to offer financial services to these businesses,” -CUNA CEO Jim Nussle.

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