The Biden administration’s treasury secretary says it is “extremely frustrating” that Congress has yet to enact marijuana banking reform legislation, adding that the department is “supportive” of the bipartisan Secure and Fair Enforcement (SAFE) Banking Act.
Rep. Ed Perlmutter (D-CO), the sponsor of that bill, raised the issue with Treasury Secretary Janet Yellen during a hearing of the House Financial Services Committee on Wednesday. He brought up the spike in violent crime targeting cannabis businesses and workers in legal states and asked to get her “sentiment on this subject.”
Yellen didn’t mince words.
“We have talked about it for a very long time, and I agree with you: It’s an important issue—and it’s an extremely frustrating one that we haven’t been able to resolve it,” she said, adding that she appreciates the congressman’s leadership on the topic.
“We’ve worked with you on this bill,” the secretary said. “We’re supportive of it.”
“As you know, there is a conflict between state and national law. Banks trapped in the middle of that. And some legislative solution, I think, is necessary to move this forward,” Yellen said. “I share your frustration that we haven’t been able to make progress. I think it does really require congressional action.”
The SAFE Banking Act has passed the House six times in some form, but it’s persistently stalled in the Senate under both Democratic and Republican control.
People are still getting killed and robbed and Congress has a responsibility to solve this problem.
📺 Watch my full conversation with Sec. Yellen HERE ➡ https://t.co/u0KNuOgTJW.
— Rep. Ed Perlmutter (@RepPerlmutter) April 6, 2022
While the bill would help resolve certain financial challenges that state-legal cannabis businesses face under federal prohibition, Perlmutter and state officials have stressed that this is a public safety issue that demands urgent action, especially amid recent crime surges targeting the cash-intensive businesses.
The congressman asked Yellen to “impress upon the administration the need” to pass the reform legislation either as part of the America COMPETES Act—large-scale manufacturing and innovation legislation to which it was attached in the House and which is now pending consideration by a bicameral conference committee—or as a standalone bill “so that nobody else dies because there’s so much cash” in the state markets.
“We would like to see that happen,” Yellen replied.
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Washington State Treasurer Mike Pellicciotti (D) has been especially vocal about the need for congressional reform, and he wrote in a recent letter to his colleagues that it’s “just not safe to have this financial volume in cash.”
Pellicciotti made similar remarks at a recent conference of the National Association of State Treasurers (NAST). And Colorado Treasurer Dave Young echoed that sentiment in a recent interview with Marijuana Moment.
Meanwhile, a Pennsylvania Senate committee approved a bipartisan bill late last month to safeguard banks and insurers against being penalized by state regulators for working with state-legal medical marijuana businesses as congressional reform continues to stall.
Perlmutter, for his part, has reiterated his committment to getting something done before his retirement at the end of this session. He’s even made a point to talk about enacting the reform legislation during committee hearings on ostensibly unrelated or wider-ranging legislation, like at a recent House Rules Committee hearing.
At a recent event hosted by the American Bankers Association (ABA), the congressman said that he will “continue to be a real pest, and persistent in getting this done” before he leaves Congress.
Following the bipartisan House passage of the banking bill, Perlmutter said he naively expected it “to sail through the Senate, which is always a bad assumption, because nothing sails through the Senate.”
But he’s taken pains to build support, including from current Senate leadership that has insisted on enacting comprehensive legalization with firm equity provisions in place before advancing a bill viewed as friendly to the industry.
Despite recently saying that he’s “confident” that the Senate will take up his bill this session, the congressman recognized that while he’s supportive of revisions related to criminal justice reform, taxation, research and other issues, he knows that “as we expand this thing, then we start losing votes, particularly Republican votes and we got enough votes in the Senate to do it” as is.
Ahead of last month’s ABA event, the financial group released a poll that it commissioned showing that a strong majority of Americans support freeing up banks to work with marijuana businesses without facing federal penalties.
Meanwhile, the number of banks that report working with marijuana businesses ticked up again near the end of 2021, according to recently released federal data.
It’s not clear if the increase is related to congressional moves to pass a bipartisan cannabis banking reform bill, but the figures from the Financial Crimes Enforcement Network (FinCEN) signal that financial institutions continue to feel more comfortable servicing businesses in state-legal markets.
Some Republicans are scratching their heads about how Democrats have so far failed to pass the modest banking reform with majorities in both chambers and control of the White House, too. For example, Rep. Rand Paul (R-KY) criticized his Democratic colleagues over the issue in December.
In the interim, federal financial regulator Rodney Hood—a board member and former chairman of the federal National Credit Union Administration (NCUA)—recently said that marijuana legalization is not a question of “if” but “when,” and he’s again offering advice on how to navigate the federal-state conflict that has left many banks reluctant to work with cannabis businesses.
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