Pennsylvania Marijuana Banking And Insurance Bill Heads To Governor’s Desk

A Pennsylvania bill that includes provisions to protect banks and insurers in the state that work with licensed medical marijuana businesses is heading to the governor’s desk following a House vote on Friday.

The legislation, which mirrors a standalone bill that has previously advanced through the legislature this session, was approved in a 173-27 vote.

As a standalone measure, the cannabis banking reform passed the Senate earlier this year, and it also cleared a House committee last week. But the chief sponsor, Sen. John DiSanto (R), then filed it as amendment to now-passed HB 311, which deals with authorizing certain financial institutions to conduct savings promotion programs.

The Pennsylvania cannabis legislation—now on its way to the desk of Gov. Tom Wolf (D), who supports marijuana legalization—is another example of how states are working to provide protections to financial institutions that are willing to service the cannabis market as Congress continues to stall on a federal fix.

“These financial institutions and insurers are still to follow the rules regulations applicable to all their other customers and consumer protection laws in the Commonwealth,” House Majority Leader Kerry Benninghoff (R) said before the vote. “Currently, there is no law for the protection of banking or funds, or protection for insurers, for the legitimate cannabis businesses in the Commonwealth.”

The HB 311 amendment will not immunize banks and insurers from potential federal repercussions—but it represents an interim step meant to signal to the financial sector that they at least won’t face penalties under state law.

The text of the Pennsylvania legislation states that a “financial institution authorized to engage in business in this Commonwealth may provide financial services to or for the benefit of a legitimate cannabis-related business and the business associates of a legitimate cannabis-related business.” The same protections will also be codified for insurers.

However, it specifies that the law will not require banks or insurers to provide services to medical marijuana businesses.

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The legislation says that state government agencies cannot “prohibit, penalize or otherwise discourage a financial institution or insurer from providing financial or insurance services to a legitimate cannabis-related business or the business associates of a legitimate cannabis-related business.”

It also says agencies cannot “recommend, incentivize or encourage a financial institution or insurer” to not provide services just because a business is associated with marijuana.

Further, state agencies cannot “take adverse or corrective supervisory action on a loan made to a legitimate cannabis-related business,” the text says.

The House introduced its own version of the marijuana banking bill in April that also included tax relief provisions for the industry that were removed from the Senate measure prior to passage.

Providing state-level protections could add pressure on congressional lawmakers to enact a federal change, such as the bipartisan Secure and Fair Enforcement (SAFE) Banking Act that has passed the House in some form six times at this point, only to stall in the Senate.

There were hopes that congressional lawmakers would include the federal banking reform in a large-scale manufacturing bill known as the America COMPETES Act that’s in bicameral conference, but leadership in both chambers reportedly reached an agreement recently to keep that language out in the interest of expediting the passage of the broader legislation.

Separately, SAFE Banking was offered as an amendment to a large-scale defense bill on Thursday. It could also be a component of a package of incremental marijuana proposals that are being considered in high-level bicameral talks.

Additionally, congressional leaders are proposing a number of marijuana policy changes in recently released spending legislation, including a provision to provide banking protections to give the cannabis industry access to the banking system.

In Pennsylvania,  a panel of lawmakers separately approved an amendment last month that seeks to make it so medical marijuana businesses can receive state tax deductions for expenses they’re currently prohibited from claiming under federal tax law.

The amendment from Rep. Aaron Kaufer (R) was attached to a broader tax code reform bill that advanced through the House Finance Committee.

The legislation would only apply to medical marijuana businesses’ state taxes, meaning those firms would still have to grapple with an Internal Revenue Service (IRS) code known as 280E that precludes businesses that work with federally controlled substances from making key tax deductions in their federal filings. But under the amended legislation, they could see some relief from the state.

Relatedly, New York’s governor also recently signed a budget proposal that similarly includes provisions to let marijuana businesses take state tax deductions that are available to other industries despite an ongoing federal ban on cannabis.

Rodney Hood, a board member and former chairman of the National Credit Union Administration (NCUA), has repeatedly emphasized the urgent need for a federal resolution to the marijuana banking problem. He recently applauded efforts by lawmakers in states like Pennsylvania to address the issue within their jurisdictions, but he said it’s not enough.

An organization representing mayors from across the U.S. recently adopted a resolution imploring Congress to pass a bill to safeguard banks that work with state-legal marijuana businesses from federal penalties.

A coalition of cannabis regulators representing 40 U.S. states and territories recently explained to congressional lawmakers just 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.

Meanwhile, back in Pennsylvania, a Senate committee on Tuesday approved a bill that would provide protections for medical marijuana patients against facing DUI charges unless they are actively impaired behind the wheel.

Bartolotta first introduced an earlier version of her bill in June 2020. She said at the time that the state needs to “ensure that the legal use of this medicine does not give rise to a criminal conviction.”

Months after the standalone reform legislation was introduced, the Pennsylvania House approved a separate amendment that would enact the policy change—but it was not enacted into law.

Pennsylvania legalized medical marijuana in 2016, with the first dispensaries in the state opening in 2018. But the state’s zero-tolerance DUI law still doesn’t reflect those changes. Because it criminalizes the presence of any THC or its metabolites in a driver’s blood—which can be detected for weeks after a person’s last use—the law puts virtually all medical marijuana patients at risk, even if it’s been days since their last use and they show no signs of impairment.

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