Business & Lobbying

New push to open banks to marijuana industry

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A bipartisan coalition of House lawmakers is pushing to give federally chartered banks and credit unions legal cover to serve the rapidly expanding cannabis industry.

A majority of states allow either legalized medicinal or recreational cannabis use, but the drug remains illegal federally. That situation has created a legal limbo that poses severe financial and security risks for cannabis businesses who’ve been largely locked out from banks and credit unions.

Financial institutions chartered under federal law have been wary of serving cannabis companies over fears of landing in regulatory or legal trouble. Without access to basic financial services, some cannabis growers and dispensaries can only operate with cash, complicating their books and spiking their risk of being subject to crimes such as armed robbery.


Lawmakers across the political spectrum and key financial industry trade groups have united behind a bill, the Secure and Fair Enforcement (SAFE) Banking Act, to solve this problem.

The measure, sponsored by Rep. Ed Perlmutter (D-Colo.), would bar federal regulators and prosecutors from penalizing banks and credit unions for serving cannabis businesses if those firms are complying with state law.

“If someone wants to oppose the legalization of marijuana, that’s their business,” Perlmutter said Wednesday at a House Financial Services subcommittee hearing on cannabis banking.

“But the American voters have spoken and continue to speak and you can’t put the genie back in the bottle. The prohibition is over.”

The effort also has the support of powerful financial trade groups such as the American Bankers Association (ABA), the Independent Community Bankers of America and the Credit Union National Association, who have endorsed a safe harbor for serving cannabis companies.

The bill’s supporters say it would create sorely needed legal clarity as states embrace the rising acceptance of cannabis. Thirty-three states have legalized the sale and use of cannabis for medicinal purposes. Ten states plus the District of Columbia have approved recreational use.

Concerns from some Republican lawmakers over the disparity between federal and state cannabis laws, though, could create a roadblock to clearing the bill through the GOP-controlled Senate.


Rep. Blaine Luetkemeyer (R-Mo.), said Wednesday that the Financial Services Committee was “putting the cart before the horse,” insisting that Congress must first deal with the federal ban on cannabis.

“I believe that we probably can’t do much today,” Luetkemeyer said. “Attempts by this committee to legalize it will only cause more problems and confusion.”

Rep. Patrick McHenry (N.C.), the top Republican on the Financial Services Committee, echoed that sentiment. “Regardless of where you fall in this cannabis debate, we have conflicting state and federal law that we have to resolve,” McHenry said.

Once cleared by the House, the bill could be sent to the Senate Banking Committee for consideration.

A spokeswoman for the panel’s chairman, Sen. Mike Crapo (R-Idaho), declined to comment for the article. Crapo is from a state that has not legalized cannabis, and the chairman appears unlikely to prioritize the issue.

Ian Katz, director at policy research firm Capital Alpha Partners, said that while the bill has a clear path through the House, hang-ups about the potential dangers of the drug could derail it in the Senate.

“The Senate includes an unknown number of men who were brought up convinced that marijuana is bad and a gateway to more dangerous drugs,” Katz wrote in a research note.

“The SAFE Act can’t pass without the support of some of those men.”

Advocates for legislation say that cannabis businesses and banks cannot wait to resolve that divide.

Sales of legal cannabis have skyrocketed as voters embrace easing restrictions on the drug, generating billions of dollars in revenue beyond the financial system’s boundaries.

States such as California, Colorado, Oregon and Washington have reaped hundreds of millions in revenue from cannabis, and the global market could be worth up to $32 billion by 2022, according to a report from ArcView and BDS Analytics.

While the cannabis industry booms, many of its businesses and employees are locked out by banks and credit unions unwilling to take the legal risk of touching money from federally banned activity.

The legal risk for banks and credit unions also extends to serving utilities and vendors that work with cannabis firms because federal law also bans some secondary financial connections to federally illegal revenue.

“Even banks that are choosing not to bank marijuana businesses are getting caught in the middle of this rule conflict,” said Rob Nichols, ABA president and CEO, in a speech last week.

“We don’t think that is good for communities, so we are seeking a policy solution. And the good news is that many in Congress on both sides of the aisle agree with us and are trying to help.”

The Democratic takeover of the House gives the bill a better chance at enactment than when Perlmutter first introduced the measure in 2017. The bill was co-sponsored by 95 lawmakers in the previous Congress — 82 Democrats and 13 Republicans — but went nowhere while the House was under GOP control.

Perlmutter has partnered with Reps. Denny Heck (D-Wash.), Steve Stivers (R-Ohio) and Warren Davidson (R-Ohio) on an updated version of the bill.

Heck, whose home state of Washington legalized recreational cannabis in 2012, praised the Financial Services subcommittee for taking action on the issue, but noted it was too late to stop “dozens of armed robberies in my home state.”

Heck invoked the story of Travis Mason, a Marine veteran who was killed in an armed robbery of a Denver dispensary where he worked as a security guard.

“We have the power in this committee to prevent murders and armed robberies,” Heck said. “We asked for hearings and we were met with silence.”

Davidson, a member of the conservative House Freedom Caucus, said the bill would protect the civil liberties of workers and business owners engaged in conduct legalized by states.

“If it’s legal in the jurisdiction you’re in, you should be free to do that without some regulator telling you that you can’t,” Davidson said.

“Our financial institutions are the wrong place to kind-of backdoor relitigate whether it should be legal or not.”

Tags Blaine Luetkemeyer Cannabis industry Denny Heck Ed Perlmutter Financial services marijuana industry Mike Crapo Patrick McHenry Steve Stivers Warren Davidson

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