The U.S. House of Representatives on Monday approved a bill to protect banks that service state-legal marijuana businesses from being penalized by federal regulators.
After receiving an initial voice vote earlier in the afternoon, members passed the legislation by a final recorded vote of 321-101.
The legislation, which was reintroduced by Rep. Ed Perlmutter (D-CO) and a long bipartisan list of cosponsors last month, was taken up under a process known as suspension of the rules, which does not allow for amendments and requires a 2/3rd supermajority to pass.
“The fact is that people in states and localities across the country are voting to approve some level of cannabis use, and we need these cannabis businesses and employees to have access to checking accounts, payroll accounts, lines of credit, credit cards and more,” Perlmutter said on the House floor. “This will improve transparency and accountability, and help law enforcement root out illegal transactions to prevent tax evasion, money laundering and other white collar crime. But most importantly, this will reduce the risk of violent crime in our communities.”
Because marijuana businesses are largely precluded from accessing traditional financial institutions and have to operate on a mostly cash-only basis, that makes them targets of crime—a point that advocates, regulators and banking representatives have emphasized.
“Even if you are opposed to the legalization of cannabis, you should support this bill,” Perlmutter added. “American voters have spoken and continue to speak—and the fact is, you can’t put the genie back in the bottle. Prohibition is over.”
Rep. Earl Blumenauer (D-OR), co-chair of the Congressional Cannabis Caucus, said “it’s time for us to address this inconsistency, it’s time for us to pass, again, the SAFE Banking Act and it’s time for us to move forward with legalization on the federal level.”
“I appreciate us being at this point—a critical first step along the path to full legalization, which I’m confident will happen this Congress, and not a moment too soon,” the congressman said.
Rep. Patrick McHenry (R-NC) spoke in opposition to the legislation, stating that “regardless of your position on this bill, I do think the fact remains that cannabis is a prohibited substance under Schedule I of the Controlled Substances Act—and let me further state, by enacting this legislation, we’re effectively kneecapping law enforcement enforcement and legalizing money laundering.”
But in a sign of the bipartisan nature of this reform, Rep. David Joyce (R-OH) took to the floor to defend the legislation. He said “I’m proud to help lead this common sense and overdue effort.”
“At a time when small businesses are just beginning to recover from the economic destruction caused by COVID-19, the federal government should be supporting them, not standing in their way,” he said.
McHenry was the only lawmaker to rise against the bill on the floor, yielding all additional opposition time to other Republican members who actually spoke in support of it.
Just before the debate started on Monday, the governors of 20 states and one U.S. territory—as well as bankers associations representing every state in the country and a coalition of state treasurers—sent letters to House leadership, expressing support for the reform legislation.
The vote marks the fourth time the House has approved the Secure and Fair Enforcement (SAFE) Banking Act. Lawmakers passed it as a standalone bill in 2019 and then twice more as part of coronavirus relief legislation. At no point did the measure move forward in the Senate under Republican control last session, however.
But this time around, advocates and industry stakeholders are feeling confident that the bill’s path will not end in the House. With Democrats now in control of both chambers and the White House, there are high expectations that the proposal will make its way through the Senate and onto the president’s desk.
The legislation would ensure that financial institutions could take on cannabis business clients without facing federal penalties. Fear of sanctions has kept many banks and credit unions from working with the industry, forcing marijuana firms to operate on a cash basis that makes them targets of crime and creates complications for financial regulators.
“For the first time since Joe Biden assumed the presidency, a supermajority of the House has voted affirmatively to recognize that the legalization and regulation of marijuana is a superior public policy to prohibition and criminalization,” NORML Political Director Justin Strekal said in a press release. “However, the SAFE Banking Act is only a first step at making sure that these state-legal markets operate safely and efficiently. The sad reality is that those who own or patronize the unbanked businesses are themselves criminals in the eyes of the federal government, which can only be addressed by removing marijuana from the list of controlled substances.”
Aaron Smith, co-founder and chief executive officer of the National Cannabis Industry Association, said the bill is “vital for improving public safety and transparency and will improve the lives of the more than 300,000 people who work in the state-legal cannabis industry.”
“It will also help level the playing field for small businesses and communities with limited access to capital,” he said. “It is time for the Senate to start considering the companion legislation without delay.”
At the beginning of Monday’s House session, prior to the formal debate on the bill, Rep. Bob Good (R-VA) voiced opposition to the legislation, arguing that it is “about legitimizing and bankrolling the marijuana industry and making legalization inevitable.”
“We’re not even directly debating our drug laws,” he said. “No, we’re cowardly debating if we should reward states that are undermining the rule of law. Despite what the swamp says, we don’t need recreational marijuana.”
House Majority Leader Steny Hoyer’s (D-MD) office first confirmed that the chamber would vote on the SAFE Banking Act on Friday.
Days after the legislation was introduced in the House last month, it was also refiled in the Senate, where Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT) are the chief sponsors. That version currently has 32 cosponsors. It remains to be seen when the bill will be scheduled for action in the chamber.
After it passed the House last Congress, advocates and stakeholders closely watched for any action to come out of the Senate Banking Committee, where it was referred after being transmitted to the chamber. But then-Chairman Mike Crapo (R-ID) did not hold a hearing on the proposal, despite talk of negotiations taking place regarding certain provisions.
Crapo said he opposed the reform proposal, but he signaled that he might be more amenable if it included certain provisions viewed as untenable to the industry, including a two percent THC potency limit on products in order for cannabis businesses to qualify to access financial services as well as blocking banking services for operators that sell high-potency vaping devices or edibles that could appeal to children.
Sen. Sherrod Brown (D-OH), who took the top seat in that panel after Democrats secured a majority in the Senate, told reporters in February that he’s “willing” to move the cannabis banking bill, “but with it needs to come sentencing reform.”
When legislative leaders announced that the SAFE Banking Act was getting a House vote in 2019, there was pushback from some advocates who felt that Congress should have prioritized comprehensive reform to legalize marijuana and promote social equity, rather than start with a measure viewed as primarily friendly to industry interests.
Rep. Earl Blumenauer (D-OR), co-chair of the Congressional Cannabis Caucus and an original cosponsor of the bill, said last month that the plan is to pass the banking reform first this session because it “is a public safety crisis now,” and it’s “distinct—as we’ve heard from some of my colleagues—distinct from how they feel about comprehensive reform.”
Meanwhile, congressional lawmakers are simultaneously preparing to introduce legislation to end federal cannabis prohibition.
Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) are in the process of crafting a legalization bill, and they’ve already met with advocates to get feedback on how best to approach the policy change.
Schumer said last week that the legislation will be introduced and placed on the floor “soon.”
On the House side, Judiciary Chairman Jerrold Nadler (D-NY) said recently that he plans to reintroduced his legalization bill, the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act, which cleared the chamber last year but did not advance in the Senate under GOP control.
Original story here.