Senate Kickstarts Potential Banking Reform with Important Hearing

With North Carolina moving towards medical, Minnesota on the cusp of full legalization and Florida moving towards voting for full legalization in 2024, the federal government has yet to pull the trigger on meaningful cannabis law reform. However, the one bill that has the greatest potential to cross over the finish line to Biden’s desk still remains cannabis banking. Ever since the dawn of the American cannabis industry, banks and credit unions have been loath to touch the industry due to its Schedule I/federally illegal status, leaving the industry in a dangerous holding pattern that has left its businesses as well as the people who work for them at great disadvantage. These and other issues were discussed at a Senate hearing which showcased many of the chamber’s staunchest supporters of cannabis reform to both discuss ways in which the bill can be improved before it moves onto a vote from the Committee and, hopefully, to the full Senate.

Possible Bipartisanship?

Even within the Republican-controlled House of Representatives, the SAFE Banking Act, as it’s come to be known, is hardly a controversial bill; it’s passed that chamber seven times. However, it’s continually stalled in the Senate up until recently. The hearing was a milestone in the move towards an eventual vote.

The act, as it stands, would prohibit bank regulators from punishing banks for offering services to state-legal cannabis businesses or any ancillary businesses, from payment processors to service contractors, that work with them. A bank’s federal deposit insurance would not be affected because of their decision to work with the industry, and a safe harbor section in the bill extends immunity for bank employees and officers from any sort of criminal prosecution, asset forfeiture or liability as well. Banks can lend freely to cannabis businesses without regulatory action, and regulators can’t strongarm banks into denying services or providing substandard ones to legal cannabis businesses. Nothing in the bill forces banks to provide services to cannabis businesses, either. However, it does lift many of the onerous conditions and uncertainties banks that currently work with the cannabis industry labor under.

The hearing began with testimonials by the bill’s Senate sponsors, Jeff Merkley (D-OR) and Steve Daines (R-MT). Both emphasized the extreme public safety hazards businesses and employees face by working in an all-cash business. “Forcing businesses to operate in a cash economy is terrible for business but great for crime,” stated Merkley before listing a host of specific crimes committed nationally against dispensaries. Daines concurred with Merkley’s public safety concerns, which he believed stemmed from the fact that only nine percent of the nation’s banks and credit unions work with cannabis businesses currently.

After delivering their pitches, Daines and Merkley yielded the floor to the second panel, which considered the subject from a variety of specialized viewpoints. Ademola Oyefeso of the United Food and Commercial Workers International Union represented the industry’s labor force, and discussed the inability of many of the 10,000 members it represents to get loans or find mortgages because of the all-cash nature of the business. In addition to reiterating the omnipresent threat of theft and robbery union members face, Oyefeso observed that federal programs like Social Security and Medicare may not be adequately funded when cannabis businesses are forced to conduct their affairs in cash. Cat Packer of the Cannabis Regulators of Color Coalition discussed the struggles cities like Los Angeles, where she served as its first Director of Cannabis Regulation until 2022, faces in taking in large amounts of cash, such as the $26.3 million it received in 2022. She advocated for extensions of the protections in the proposed bills to Community Development Financial Institutions and Minority Depository Institutions, which exist to give financial services to underserved populations, as well as to relax restrictions on providing services to cannabis business owners with criminal records relating to cannabis, considering the doors that have been opened to some through social equity programs.

The question period gave a few committee members to display their movement bona fides, particularly Senator Elizabeth Warren, who acknowledged alongside Packer that larger federal decriminalization and de-scheduling is needed to fully dismiss the burdens under which cannabis businesses struggle. And John Fetterman also delivered pointed questions to the panel’s lone prohibitionist, Kevin Sabet. However, the Senate Majority Leader would add some of the most pointed issues to the agenda after Committee Chairman Sherrod Brown gaveled the meeting closed.

The Road Ahead

Hours after the hearing, Senate Majority Leader Chuck Schumer reported that the SAFE Banking Act would face a committee vote soon, although he didn’t specify when. He also mentioned that he would affix certain criminal justice provisions, such as expungements and federal grants for states that will further the cause of clemency, to the bill.

The Feds have been down this road before, of course. And it is still uncertain how the Senate will respond. As Marijuana Moment acknowledged, a simple bill to study medical cannabis for vets didn’t even get a full vote during the previous month. Still, any bill that is supported by the American Banking Association, along with nine insurance trade organizations and several worker unions, does have the capacity to move pro-business Republicans as well as labor-oriented/progressive Dems — perhaps enough to finally make things happen. One can only hope.