Issue: This morning, the House Financial Services Committee passed H.R.
1595, “The Secure And Fair Enforcement (S.A.F.E.) Banking Act,” by a vote of
45-15. 11 Republicans joined Democrats in passing the legislation.
Impact: The S.A.F.E Banking Act would prohibit Federal regulators from
punishing financial institutions that accept deposits from cannabis businesses
that are operating legally at the state level. Under current law, there is no
specific prohibition on financial institutions accepting deposits from cannabis
businesses, but this bill would make it explicit that Federal law enforcement
cannot punish financial institutions that do, providing greater legal clarity. Many
small financial institutions have been working with cannabis companies for
years in states that have legalized the substance, and larger banks have begun
to embrace these businesses as well, with the American Bankers Association
(ABA) and Credit Unions joining the push for the legislation.
However, many financial institutions will still likely refuse to do business with
cannabis companies even if this bill were to become law. Even without the fear
of Federal law enforcement not bringing criminal penalties on these institutions,
they still must deal with the increased compliance and scrutiny of anti-money
laundering (AML) rules and file suspicious activity reports (SARs) that come
with servicing these customers. Many Republicans who opposed the bill cited
the need to address these concerns as the reason for their vote.
Next Steps: The bill is expected to move to the House Floor in the next 2-3
weeks, where it will likely pass with unanimous Democratic support in addition
to dozens of Republican votes. Sens. Jeff Merkley (D-OR) and Cory Gardner
(R-CO) are expected to file companion legislation on access to financial
services for marijuana businesses in the Senate soon. A prior bill during the last
Congress garnered 20 cosponsors in the chamber but did not receive a hearing
or vote. While Majority Leader Mitch McConnell (R-KY) may be willing to put
aside his personal views on cannabis to help the vulnerable Senator Cory
Gardner (R-CO), opposition from other Republican members of the body is
likely too strong for much other than a “show vote.” Moreover, Senate Banking
Committee Ranking Member Sherrod Brown (D-OH) said he has no plans to
push Chairman Mike Crapo (R-ID) on the issue at this time.
More information, below:
The bill’s sponsor, Rep. Ed Perlmutter (D-CO) updated the bill to clarify that it
covers Federal Reserve Banks, in addition to several measures related to
diversity and inclusion of women and minorities in the cannabis industry. The
Committee also passed an amendment by freshman Rep. Katie Porter (D-CA)
that qualifies credit unions and de novo banks for the bill’s safe harbor. 1 of the
legislation’s 2 GOP cosponsors, Rep. Steve Stivers (R-OH) successfully
attached his amendment including insurers in the safe harbor.
Other Republican amendments, largely regarding delaying implementation of
the bill until cannabis is de-scheduled, or until regulators can certify that the law
does not leave financial institutions more susceptible to illicit activity, were
defeated along party lines.
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