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Senate chairman announces opposition to cannabis banking bill

Senate chairman announces opposition to cannabis banking bill
© Greg Nash

The chairman of a key Senate committee said Wednesday that he is uncomfortable advancing a bill to protect financial sector access for cannabis companies without stricter health and illicit financing safeguards.

Senate Banking Committee Chairman Mike CrapoMichael (Mike) Dean CrapoMnuchin to put 5B in COVID-19 relief funds beyond successor's reach Democrats accuse Mnuchin of sabotaging economy in dispute with Fed Shelton's Fed nomination on knife's edge amid coronavirus-fueled absences MORE (R-Idaho) said in a Wednesday statement that he opposes a House-passed bipartisan bill to give banks and credit unions legal cover to serve cannabis firms, but is open to amending the measure to satisfy his concerns.

Crapo said he had “significant concerns” that the Secure And Fair Enforcement (SAFE) Banking Act does not address the potency of cannabis, the marketing of the drug to children, the lack of research on its health effects, and the ability of cartels and other criminal groups to profit.

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Crapo’s opposition to the measure poses a significant, if not entirely shocking, hurdle to the coalition of financial sector lobbyists, criminal justice advocates and public safety groups supporting the SAFE Banking Act.

The House passed the bill in October by a vote of 321-103 with support from nearly all Democrats and a substantial group of 91 Republicans. The measure would prevent banks and credit unions from facing federal charges for serving cannabis dispensaries, growers and firms that handle the drug so long as they comply with state laws.

The rapid state-level legalization of cannabis has created a multibillion-dollar industry in the U.S., but banks and credit unions have been reluctant to risk federal prosecution for serving state-legal businesses. That has forced hundreds of cannabis firms to operate only with cash, making them prime targets for armed robbery and other crimes.

Though cannabis is illegal under federal law, 33 states have legalized medicinal or recreational use of the drug. Another 14 allow residents to use non-intoxicating cannabidiol (CBD) products, leaving just three states without any legally approved cannabis use. 

One of those three states is Crapo’s home of Idaho, and his personal opposition to cannabis legalization was an early obstacle to the bill’s Senate passage. However, Crapo’s reluctance to move any bill involving cannabis is widely shared among Senate Republicans, including Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellMcConnell halts in-person Republican lunches amid COVID-19 surge Biden and reproductive health rights Biden's Cabinet a battleground for future GOP White House hopefuls MORE (R-Ky.)

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The bill’s supporters counter that the measure doesn’t impact the federal legal status of cannabis, but instead ensures that state sales of the drug are monitored through federal banking laws. Advocates also argue that forcing cannabis companies to use only cash raises public safety risks and reduces transparency.

The bill’s supporters remained hopeful that they could find a way to get the bill through the Senate.

“America’s credit unions are eager to continue engaging with the Chairman as he seeks a solution that enhances community safety through access to mainstream financial services,” said Ryan Donovan, chief advocacy officer for the Credit Union National Association (CUNA), a trade group for credit unions that endorsed the bill.