With congressional leaders appointing key lawmakers to negotiate the final form of a broad manufacturing and innovation bill in recent days, many advocates and stakeholders are hopeful it will be the vehicle to finally enact protections for banks that work with state-legal marijuana businesses—as the House included in its version of the large-scale legislation that’s now heading to a bicameral conference committee.
Already, there are signs that the bipartisan Secure and Fair Enforcement (SAFE) Banking Act could be a focal point for negotiators, with the chairwoman of the House Financial Services Committee on Monday listing the bill as one of her panel’s legislative “priorities” as lawmakers move closer to conference.
The measure’s sponsor also emphasized that a strong majority of members appointed to the conference committee have already either cosponsored or voted for marijuana banking legislation in the past.
Rep. Maxine Waters (D-CA) didn’t explicitly say how hard she would fight for the cannabis measure’s inclusion in the final package in her capacity as a conferee, but she made a general comment about how Democrats have pushed for policies meant to maximize economic impact and said that cannabis banking reform would both support state markets and provide public safety protections.
“Cannabis businesses are currently forced to operate on a cash-only basis, which has created a serious public safety risk for employees, businesses and communities, as well as providing opportunities for tax evasion and money laundering,” the press release from Waters’s committee says.
— U.S. House Committee on Financial Services (@FSCDems) April 11, 2022
Meanwhile, another conferee that House Speaker Nancy Pelosi (D-CA) appointed last week is Rep. Earl Blumenauer (D-OR), who has long fought to end prohibition comprehensively but has also insisted that there’s an urgent need to take the incremental step of enacting the SAFE Banking Act.
In an op-ed for Marijuana Moment that was published on Monday, Blumenauer described the banking reform measure as “a huge step” toward public safety and equity in the industry.
Rep. Ed Perlmutter (D-CO), sponsor of the marijuana banking bill that’s passed the House in some form six times now, was not selected as a conferee. But he’s made clear that he would pursue any possible vehicle to get his legislation passed before his retirement at the end of this session, and he sits on the key House Rules Committee that all legislation must go to before receiving a floor vote.
“I appreciate the continued support of the SAFE Banking Act in the House, including from Chairwoman Waters and my colleagues on the Financial Services Committee,” Perlmutter told Marijuana Moment on Monday. “The House has shown time and time again there is overwhelming, bipartisan support for SAFE Banking.”
“With the America COMPETES Act Conferees announced last week, we now see more than two-thirds of the conferees have already voted for or cosponsored the SAFE Banking Act,” he said. “Now is the time to finally address this public safety problem and include the SAFE Banking Act in the final America COMPETES package.”
On the Senate side, there may be some complications for SAFE Banking supporters.
While 10 of the 13 Democratic senators appointed by Senate Majority Leader Chuck Schumer (D-NY) to serve as conferees for the America COMPETES Act have signed on a cosponsors to the Senate’s standalone version of the SAFE Banking Act, Schumer himself has insisted that comprehensive federal legalization legislation with equity provisions should advance, rather than the industry-focused financial services measure.
Schumer and Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) plan to formally introduce a legalization bill to that effect this month.
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It remains to be seen whether the Democratic senators would proactively work to prevent the measure’s inclusion in the manufacturing bill, but Perlmutter did place blame on Schumer for the exclusion of SAFE Banking in a separate, wide-ranging defense bill in a final package late last year after the House included it in its version.
Then there’s the GOP Senate appointments. While the SAFE Banking Act is widely considered to be a bipartisan bill, zero of the GOP members of the new conference committee have signed on as cosponsors, and Senate Minority Leader Mitch McConnell (R-KY) said in February that House Democrats’ decision to put marijuana banking in the America COMPETES Act constituted a partisan “poison pill”—and so it’s likely to face resistance from that side in the negotiations.
The ranking member of the Senate Finance Committee, Sen. Mike Crapo (R-ID), could also pose a threat. The senator, who was also appointed to be a conferee, declined to give the banking legislation a hearing when Republicans were in control of the Senate and generally views the standalone proposal as excessively broad.
Back in the House, Perlmutter recently spoke with Treasury Secretary Janet Yellen about the marijuana banking issue during a hearing of the House Financial Services Committee. And the secretary said that it’s “extremely frustrating” that Congress hasn’t “been able to resolve it.”
The congressman asked Yellen to “impress upon the administration the need” to pass the reform legislation either as part of the America COMPETES Act or as a standalone bill “so that nobody else dies because there’s so much cash” in the state markets.
While the SAFE Banking Act would help resolve certain financial challenges that state-legal cannabis businesses face under federal prohibition, Perlmutter and state and federal officials have stressed that this is a public safety issue that demands urgent action.
National Credit Union Administration (NCUA) board member Rodney Hood has made repeated calls for a policy change with respect to the cannabis banking conflict, most recently at an event organized by the Emerging Markets Coalition last week.
He said that while it’s unconventional for regulators so vocally criticize Congress about legislative topics, this problem demands special attention.
Amid a scourge of violent crimes targeting cash-intensive cannabis businesses, certain states are moving to provide state-level protections for financial institutions that service the industry, Hood said. And New York lawmakers are seeking to provide tax breaks for the forthcoming marijuana market.
“I’m not entirely satisfied that the most constructive action seems to be happening at the state level—we need a federal solution, rather than a patchwork of state reforms,” he said. “But in the absence of congressional action, I’m pleased that these state officials are working to address this issue, and I commend them for their leadership and foresight.”
Earlier this month, for example, a Pennsylvania Senate committee approved a bipartisan bill to safeguard banks and insurers against being penalized by state regulators for working with state-legal medical marijuana businesses.
Washington State Treasurer Mike Pellicciotti (D) has also been especially vocal about the need for congressional reform, and he wrote in a recent letter to his colleagues in other states 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.
Perlmutter, for his part, has 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.
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.