Pressure is steadily mounting on U.S. lawmakers to implement comprehensive cannabis banking reform at the federal level, and that pressure is coming from all directions.
Rapid shifts in public opinion and a rising number of states with legal medical and adult-use cannabis sales have laid bare an obvious need to update our banking laws to meet the age of regulated cannabis markets. After similar bills languished in the previous Congress, it’s incredibly encouraging to see House members tackling the issue head on, as it has huge implications for the future of banking for America’s legal cannabis industry.
The signs of progress started in February, with an unprecedented hearing by the House Financial Services Committee to discuss the challenges surrounding federally regulated financial institutions providing services to cannabis businesses.
The momentum continued in March, with the reintroduction of the Secure and Fair Enforcement (SAFE) Banking Act by Rep. Ed Perlmutter (D-CO). The legislation, which would provide safe harbor to banks working with state-legal cannabis businesses, counts a large and diverse group of lawmakers, regulators, law enforcement professionals, financial institutions, businesses interests and trade organizations among its supporters.
Perlmutter had the bipartisan support of 108 original co-sponsors — that number has continued to swell. And on March 28, the House Financial Services Committee voted 45-15 to advance the bill to the full body, where it could see a vote within weeks.
House Financial Services Committee member Perlmutter, along with Rep. Denny Heck (D-WA), introduced the SAFE Banking Act in the last Congress, with 95 co-sponsors — including 13 Republicans — signing on. Twenty bipartisan co-sponsors signed onto the companion bill, introduced in the Senate by Jeff Merkley (D-OR). The two bills drew some heavyweight co-sponsors from both sides of the aisle, including Sen. Rand Paul (R-KY), Sen. Elizabeth Warren (D-MA), Sen. Cory Gardner (R-CO), Sen. Kamala Harris (D-CA) and Sen. Cory Booker (D-NJ), and in the House, Rep. Beto O’Rourke (D-TX), Rep. David Joyce (R-OH), Rep. Tulsi Gabbard (D-HI) and Rep. Adam Schiff (D-CA).
And a bipartisan group of 19 state attorneys general came together last year to urge Congress to advance legislation that would allow state-legal cannabis businesses to utilize traditional banking services available to every other legal industry in the United States.
Groups like the Credit Union National Association, the Independent Community of Bankers of America, American Bankers Association and the National Cannabis Industry Association are also vocal advocates for the measure.
As the U.S. cannabis industry continues along its steady growth trajectory, access to banking services is perhaps the most critical challenge facing operators.
And that wasn’t the first attempt in the House to address the cannabis banking problem. In 2014, House lawmakers passed an amendment to an appropriations bill (228-195) that, much like the SAFE Banking Act, would have extended legal protections to financial institutions working with state-regulated cannabis businesses. The measure failed to move through the Senate, however.
But much has changed since 2014. Ten states and Washington, DC, have now legalized cannabis for adult use; 33 states have legalized comprehensive medical cannabis programs; two in three Americans now support legalizing cannabis nationwide for recreational use, according to Gallup polling data; and a majority of older Americans — a formidable voting bloc — now supports legalization. Momentum around cannabis reform is spreading across the globe as well, with cannabis now legally available to adults for recreational use in both Canada and Uruguay, and numerous countries mulling similar reforms.
A brand new multi-billion-dollar industry has risen up in a few short years, and yet, most financial institutions in the U.S. remain reluctant to work with cannabis businesses due to fears of violating federal money laundering laws. That fear has forced the majority of cannabis businesses to operate on a cash-only basis — creating massive security risks, logistical nightmares and regulatory headaches for all parties involved.
As the U.S. cannabis industry continues along its steady growth trajectory, access to banking services is perhaps the most critical challenge facing operators. The recent House Financial Services Subcommittee hearing represents the committee’s first-ever hearing on this issue — a promising first step toward passing the SAFE Banking Act.
Sixty-seven percent of Americans across the political spectrum want Congress to enact legislation allowing financial institutions to do business with legal cannabis operators, according to polling data from think tank Third Way.
It’s truly heartening to see the House Financial Services Committee wouldn’t allow the SAFE Banking Act to fall by the wayside. Sen. Merkley is expected to soon re-introduce a similar measure in the Senate. Now we need lawmakers in both chambers to continue to prioritize this issue and move these measures through the legislature, so they can become the law of the land.