Alert: Senate Banking Chair Supports Cannabis Banking Legislation

Issue: Following last week’s hearing in the Senate Banking Committee,
Chairman Mike Crapo (R-ID) backed legislation to provide a safe harbor to
financial institutions offering services to cannabis businesses. In an interview
today, Crapo said: “I think all the issues got well vetted. We now need to, I
think, move forward and see if there’s some way we can draft legislation that
will deal with the issue.”

Impact: Senators Cory Gardner (R-CO) and Jeff Merkley (D-OR), sponsored
the legislation, known as The Secure and Fair Enforcement (“SAFE”) Banking
Act. Gardner viewed the lack of participation among his GOP colleagues at
least week’s hearing as a positive, saying “There was some criticism that the
Republican attendance wasn’t there, but if they wanted to blow it up, they
would’ve been there. So, I look at that as sort of an acknowledgment that this is
now just a status quo issue and not something that they’re going to try and
interfere with.”

Next Steps: Crapo’s support makes it substantially more likely that The SAFE
Banking Act could become at least semi-permanent law through the
appropriations process. The House included a provision that would grant the
same protections to financial institutions in the FY 2020 Financial Services &
General Government appropriations bill. The House also passed a bipartisan
amendment to ban Federal law enforcement from interfering with state
cannabis programs in the Departments of Commerce, Justice, Science, and
Related Agencies [Commerce, Justice, Science, Agriculture, Rural
Development, Food and Drug Administration, Interior, Environment, Military
Construction, Veterans Affairs, Transportation, and Housing and Urban
Development Appropriations Act. However, this legislation would likely face
more resistance from Senate Republicans.

Crapo is also open to an Administrative approach which could entail the Drug
Enforcement Agency (DEA) within the Department of Justice (DoJ)
rescheduling cannabis or constituent chemicals under The Controlled
Substances Act. It is unclear, however, how much regulatory latitude the DEA
has because marijuana was originally added to the list by Congress, unlike
other substances which have been added to the list at the DEA’s discretion:
“There are other ways it could be solved. For example regulatory—they could
deal with the issue at the Department of Justice, but I don’t know.” Ultimately
however, only a permanent change to the statutory code is likely to provide
legal certainty to financial institutions.

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