In a bipartisan vote on Monday, the US House of Representatives approved a reform of the federal bank rules that would finally allow legal marijuana companies to gain access to banks.
The end of a dangerous and unwieldy cannabis industry only available for cash, and the encouragement of investments that would diversify and equate the industry previously dominated by white men and wealthy capitalists, is once again going to the U.S. Senate, where most of the cannabis is located Reform laws have died.
DC Marijuana Justice (DCJM) activists wave flags during a rally calling for the passage of Congress … [+]
AFP via Getty Images
For the fourth time, the house approved the so-called Secure and Fair Enforcement Banking Act (SAFE Act).
Monday’s vote was 321 to 101 and included the support of a majority of Republicans.
Although cannabis is at some level legal in 47 states – and adult cannabis is a booming billion dollar industry in more than a dozen, with markets opening soon in four other states, including New York and New Jersey – Almost every major banking and credit unions will refuse to accept business from legal cannabis companies for fear of prosecution or federal punishment.
This apology seems dishonest to some observers – after all, banks have banner deals with very illegal drug cartels for years – and there are some banks that tacitly accept cannabis customers.
The practical effect, however, was that a legal industry worth billions of dollars was forced to conduct basic transactions in cash, including paying state and state taxes, an arrangement that critics believe is unfair and unsafe.
The SAFE Act makes it clear that transactions with “legitimate cannabis companies” are not subject to anti-money laundering laws and that banks do not violate the forfeiture process used to clear the accounts of the legal cannabis business.
Sponsors say banking reform will make marijuana business easier and safer to run. But we’ve been here before.
The banking reform has already been passed in the House of Representatives: once as a separate bill and twice as part of COVID-19 aid packages.
Now the action is going to the U.S. Senate, where despite the promise of Majority Leader Chuck Schumer (D-NY) that cannabis legalization will take place – and soon – cannabis banking is still on the brink of spike.
It is very likely that the Senate version of the SAFE Banking Act will get at least one hearing, which is more than the bill could expect when Senator Mitch McConnell was majority leader.
Senator Sherrod Brown, an Ohio Democrat whose state has a medical-marijuana industry, chairs the Senate Banking Committee. And the senior member, Senator Patrick Toomey, is a Pennsylvania Republican who is expected to be one of the next states to legalize adult cannabis.
The Senate version is sponsored by Senator Jeff Merkley (D-OR). Merkley has 32 co-sponsors, including seven Republicans. However, due to the secret rules of the Senate, 60 votes are required to pass meaningful legislation without parliamentary maneuvers.
While cannabis companies have the option of paying taxes to the federal government, which bans them, doing so is considered to be the most conservative marijuana policy reform Congress could pursue. However, this is by no means guaranteed.
Still, cannabis reform advocates and industry lobbyists have something meaningful to celebrate.
“From lack of seed capital for the full application process to managing extraordinary operating costs, minority business owners often face the painful decision of whether to sell or sell their interests to predatory investors who leverage management agreements that deprive minority operators of significant property rights,” said Amber Littlejohn. Managing Director of the Minority Cannabis Business Association.
SAFE Banking could fix that – if the Senate complies.