Marijuana banking reform will not be included in a large-scale manufacturing bill that’s being negotiated in a bicameral conference committee, congressional leaders from both parties have agreed.
In the interest of getting the larger legislation passed more expediently before the August recess, Senate Majority Leader Chuck Schumer (D-NY), Minority Leader Mitch McConnell (R-KY), House Speaker Nancy Pelosi (D-CA) and Minority Leader Kevin McCarthy (R-CA) met this week to scale the bill down.
That included ceding to a Republican demand to keep the Secure and Fair Enforcement (SAFE) Banking Act out of the legislation, Punchbowl News first reported on Thursday.
It was never a guarantee that the cannabis banking bill would make it into the America COMPETES/USICA conference report, despite the House including it in its version before heading to conference. Schumer, for his part, has repeatedly suggested he is uncomfortable moving the narrow financial reform ahead of broader justice-focused cannabis legalization, and his office had tempered expectations about the possibility of SAFE being enacted through the manufacturing bill early on in the bicameral talks.
Lead SAFE Banking Act sponsor Rep. Ed Perlmutter (D-CO) reacted strongly to the news that bicameral leaders had agreed to keep his legislation from advancing yet again.
“The Senate continues to ignore the public safety risk of forcing cannabis businesses to deal in all cash,” he told Marijuana Moment. “In the wake of the Senate’s inaction, people continue to be killed, businesses continue to be robbed, and employees and business owners in the cannabis industry continue to be excluded from the financial system.”
The news that an agreement has been made at the highest levels of congressional leadership is a source of serious frustration for supportive lawmakers, stakeholders and advocates. Now Perlmutter will in all likelihood need to pursue a different vehicle for the reform, which has passed the House in some form six times at this point, although he said he will keep pushing to include it in the current legislation despite leaders’ decision.
“I will continue to push for SAFE Banking to be included in COMPETES, other legislative vehicles, or for the Senate to finally take up the standalone version of the bill which has been sitting in the Senate for three and a half years,“ he said.
News in @PunchbowlNews AM: marijuana banking and climate provisions are out of USICA bill.
Plus, inside Democrats’ ACA subsidies jam. https://t.co/n9guFvDjxO
— Punchbowl News (@PunchbowlNews) June 23, 2022
One possibility would be to include the legislation is a package of incremental reforms that is apparently being discussed as an alternative to a comprehensive legalization bill that Schumer and colleagues are finalizing.
It could also potentially get a ride in the latest version of the National Defense Authorization Act (NDAA). The House included cannabis banking provisions in its version of that bill last year, but could not reach an agreement with the Senate to enact it as part of the final package. The House Armed Services Committee marked up the 2023 version of NDAA on Wednesday, and it is possible that SAFE Banking could be added as a floor amendment once more.
But in any case, the lack of SAFE Banking in America COMPETES is a setback, especially considering the number of lawmakers from both chambers who insisted that the issue is a priority and vowed to push for its inclusion.
America COMPETES conferees such as House Financial Services Committee Maxine Waters (D-CA), Rep. Earl Blumenauer (D-OR) and the third-highest-ranking Democratic member in the Senate, Sen. Patty Murray (D-WA), were especially vocal about getting the reform accomplished through the manufacturing bill.
The conference committee on the America COMPETES Act held its first meeting on that bill last month, with multiple appointed conferees urging the body to attach the SAFE Banking Act language in the interest of economic competitiveness and public safety.
The standalone Senate version of the SAFE Banking Act currently has 42 cosponsors, including nine Republicans.
That reluctance on the Senate side to advance the issue was also the subject of a letter that Perlmutter sent to leadership last month.
In a previous statement to Marijuana Moment, Perlmutter pointed out that “more than two-thirds of the conferees have already voted for or cosponsored the SAFE Banking Act.”
The congressman 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.
Despite recently saying that he’s “confident” that the Senate will take up his bill this session, Perlmutter 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.
Additionally, nearly a quarter of all senators sent a bipartisan letter this month urging that cannabis banking be included in the final bill.
Congress has been facing pressure on multiple fronts to get the marijuana banking bill across the finish line with America COMPETES.
That includes pressure from the Conference of State Bank Supervisors (CSBS), banking associations representing all 50 states and one U.S. territory and the Independent Community Bankers of America (ICBA).
Outside of the direct financial sector, an organization representing mayors from across the U.S. adopted a resolution last week imploring Congress to pass a bill to safeguard banks that work with state-legal marijuana businesses from federal penalties.
The GOP Senate sponsor of the banking bill recently released an ad that features the CEO of the Montana Bankers Association explaining what he sees as the benefits of the incremental reform legislation.
Separately, a coalition of marijuana advocacy groups recently launched a campaign meant to promote education about the need for the incremental reform, highlighting what they see as the social and economic equity advantages of freeing up businesses in the industry to access traditional financial services.
Last month, a coalition of cannabis regulators representing 40 U.S. states and territories separately explained to Congress what the current lack of access to traditional financial services means—not just for the businesses and the programs they oversee, but for the regulators navigating this federal-state conflict themselves.
The non-partisan Cannabis Regulators Association (CANNRA), which doesn’t take a stand on legalization itself, sent a letter to congressional leaders, outlining areas of concern for their states’ respective marijuana markets under the status quo of federal prohibition.
But not everyone is accepting the idea that SAFE Banking alone will provide the relief and resources to disadvantaged communities that proponents are arguing it will.
Cannabis Regulators of Color Coalition has also weighed in on the cannabis banking conundrum, arguing in a Marijuana Moment op-ed that the SAFE Banking Act is insufficient. The group says advocates should push to add provisions to the bill providing interim safeguards for Community Financial Depository Institutions (CFDIs) and Minority Depository Institutions (MDIs), as well as measures to prevent predatory lending and promote loan availability for people from disadvantaged communities.
Meanwhile, the governor, attorney general and other top officials in Washington State sent a letter to congressional leaders last month, again emphasizing the urgent need to pass marijuana banking reform as a public safety imperative.
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.
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