The House passed a bill on Monday that would allow banks and financial institutions to work with cannabis businesses.

The measure was approved in a 321-101 vote. The legislation now heads to the Senate, where Senate Majority Leader Charles Schumer (D-N.Y.) has said it will receive a vote.

The House passed the same bill in 2019 by a similar margin, but it stalled in what was then the GOP-controlled Senate.

The SAFE Banking Act states that proceeds from legitimate cannabis businesses will not be considered illegal. It would direct federal regulators to craft rules for how they would supervise such banking activity.

Banks and credit unions have largely avoided serving cannabis firms because of the gap between federal and state laws. Cannabis is illegal under federal law, but three-dozen states have legalized medical or recreational use of the drug. Financial firms that work with a cannabis company, however, risk steep federal penalties, even in states that have legalized the drug.

The House-passed legislation has broad support in the banking industry, including from the American Bankers Association.

“Banks find themselves in a difficult situation due to the conflict between state and federal law, with local communities encouraging them to bank cannabis businesses and federal law prohibiting it,” the group wrote in a letter to lawmakers on Monday. “Congress must act to resolve this conflict.”

Thirty-six states have legalized medical cannabis and 17 states have legalized adult, recreational use.

According to MarketWatch, cannabis stocks soared after the House vote.  

Industry experts say the change is critical to developing a national marijuana industry and the development of regulations and banking practices would be necessary if cannabis was ever legalized medically or recreationally at the federal level.

Tags American Bankers Association Banking Cannabis Charles Schumer Marijuana medical marijuana Recreational marijuana

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