Pot banking bill supporters seek path to passage in skeptical Senate

Pot banking bill supporters seek path to passage in skeptical Senate
© Aaron Schwartz

Advocates for a bill to give financial firms legal cover to serve cannabis companies urged senators Tuesday to put aside skepticism of the drug to help secure and regulate its expanding market.

At a Senate Banking Committee hearing, a bipartisan alliance of lawmakers and industry officials called on the Senate to take up a bill meant to settle legal uncertainty that often deprives cannabis firms access to banks and credit unions.

Called the SAFE Banking Act, the measure would bar federal regulators and prosecutors from penalizing banks and credit unions for serving marijuana-based businesses if those firms are complying with state law.

The bill is likely to pass the House, where cannabis legalization or decriminalization in some form is broadly supported among the Democratic majority. The trouble then lies in the GOP-controlled Senate, with Republicans are far less interested in aiding the burgeoning cannabis industry.

Supporters of the measure acknowledge how ideological divides and open questions about the safety of pot use could hinder it in the Senate. 

But the bill’s advocates hailed a subtle but potentially significant comment from Sen. Mike CrapoMichael (Mike) Dean CrapoThe Energy Sector Innovation Credit Act is an industry game-changer The 19 GOP senators who voted for the T infrastructure bill Wyden asks White House for details on jet fuel shortage amid wildfire season MORE (R-Idaho), the conservative Banking panel chairman, as a sign of progress.

“I think a case has been made pretty strongly here about the need to get the banking industry issues relating to cannabis resolved,” said Crapo, whose home state bans marijuana for any purpose. 

“This is a very important and complex issue that we need to get right.”

Crapo was but one of only two Republicans to show for the hearing, including Sen. Cory GardnerCory GardnerProtecting the outdoors: Three cheers for America's best idea Ex-Sen. Cory Gardner joins lobbying firm Biden administration reverses Trump changes it says 'undermined' conservation program MORE (Colo.), the bill’s lead GOP co-sponsor who is up for reelection in a swing-state next year.

The measure's supporters insist that if Congress can’t resolve marijuana's federal stats, it should at least allow banks and credit unions to serve state-legal firms in the 33 states where the drug is legal in some form.

“The states are leading on this issue, and the federal government has failed to respond. It has closed its eyes and plugged its ears and pretended the issue will go away. It won’t,” Gardner said.

“We are a government of the people, and the people have changed their views. So our laws must change.”

Banks and credit unions chartered under federal law have been hesitant to serve pot companies over fears of landing in regulatory or legal trouble. Without access to basic financial services, some weed growers and dispensaries can only operate with cash.

Supporters of the measure sought to illuminate the tangle of legal and safety issues targeted by the bill while ceding the difficult questions regarding cannabis legalization.

Several expressed concerns about the safety of dispensaries and workers frozen out from banks who are forced to conduct millions of dollars of transactions in cash. 

“No matter how you feel about marijuana itself, we have a duty to look out for all the workers and communities we represent,” said Sen. Sherrod BrownSherrod Campbell BrownCentrist state lawmaker enters Ohio GOP Senate primary The Trojan Horse of protectionism Advocates call on top Democrats for 0B in housing investments MORE (D-Ohio). “We can't continue to ignore this industry and the thousands of workers and communities and effects.”

Others raised the legal exposure faced by businesses offering perfectly legal products or services to cannabis firms, who would pay with profits from federally banned transactions.

“Cannabis businesses do not operate in a vacuum, and indirect connections are hard to avoid,” said Rachel Pross, chief risk officer for Oregon-based Maps Credit Union.

Pross also noted that giving banks and credit unions a safe harbor to serve cannabis companies can provide law enforcement with a steady stream of data to help snuff out potential illegal activity.

The measure’s path in the Senate is also complicated by the myriad political, medical and criminal justice issues indelibly tied to the debate on financial services access for weed companies.

“Make no mistake, a policy change around banking would have massive public health ramifications,” said Garth Van Meter, vice president of government affairs for Smart Approaches to Marijuana, which opposes legalization.

“There is still an opportunity for the other witnesses in the banking industry at this table to wash their hands of the marijuana industry and say, ‘we want no part of this coming nightmare.’”

Even some of the measure’s supporters acknowledged the lack of clarity and need for greater research on the long-term health effects of pot use. But the bill’s backers urged critics to set aside their personal feelings toward the drug in deference its widening popularity among Americans.

“Let’s stand with state’s rights. Let’s stand with the judgement of individuals across the nation,” said Sen. Jeff Merkely (Ore.), the bill’s lead Democratic co-sponsor.”