Issue: Next Tuesday, the House Financial Services will hold a markup ofH.R.
1595, “The Secure And Fair Enforcement (S.A.F.E.) Banking Act,”introduced by
Rep. Ed Perlmutter (D-CO), and Rep. Stivers (R-OH), among another 143
bipartisan co-sponsors. This legislation would allow cannabis-related
businesses access to financial services and exempt them from Federal
prosecution for providing services legal under state law. The markup will
continue as planned despite a letter from Reps. Patrick McHenry (R-NC) and
Blaine Luetkemeyer (R-MO), Ranking Members of the full Committee and
Subcommittee on Consumer Protection & Financial Institutions, asking that the
bill be put on hold until Congress has more time to conduct due diligence.
Impact: McHenry and Luetkemeyer’s letter reflects the concern among the
majority of Republicans that cannabis’ status as a schedule I drug at the
Federal level raises complications that could result from the bill becoming law,
including concerns related to enforcement of Bank Secrecy Act (BSA), antimoney laundering (AML) and Know Your Customer (KYC) regulations, as well
as Suspicious Activity Report (SAR) and Currency Transaction Report (CRT)
Next Steps: The bill will likely pass the Committee on a bipartisan vote,
although with more support on the Democratic side of the aisle. As more states
relax cannabis laws others will gradually join as their voter base demands.
However, the Senate remains the key roadblock to any cannabis-related
legislation. Currently, there is no Senate companion to the House legislation.
McHenry laid out the path to GOP support in a hearing on the bill last month:
tying the bill in with a larger reform of the Bank Secrecy Act. Although this is a
tall hurdle in a divided Congress, the markup will be an indicator of whether
Republicans are willing to work with Democrats on this issue, rather than
merely slow down the expansion of cannabis legalization.
More information, below:
The proliferation of hemp-based products after their legalization in last year’s
Farm Bill provides a preview of what nation-wide cannabis legalization could
look like. CVS will begin selling hemp products in over 800 stores through
distributor Curaleaf. Products include CBD creams, sprays, and lotions,
however, CVS will not offer any supplements or food additives containing CBD,
as none have been approved by the Food & Drug Administration (FDA). The
FDA will hold a series of public meetings on the regulation of CBD next month.
Outgoing FDA Commissioner Scott Gottlieb has suggested that the FDA could
continue to regulate CBD products with a high concentration of THC as a
pharmaceutical product, while providing a path to approval for lower
concentration products used in food and supplements.
Please contact ACG Analytics for more information.