Issue: Yesterday, Senate Banking Committee Chairman Mike Crapo (R-ID) stated his
intention to hold a markup by the end of the year on legislation to provide a safe harbor for
financial institutions to service cannabis businesses. The Senate Banking Committee held
a hearing on the issue in July, and Crapo stated his support to move legislation shortly
before the August recess.
Impact: It has been over 500 days since the Senate Banking Committee has held a
markup. Senator Jeff Merkley (D-OR) and Senator Cory Gardner (R-CO) sponsored the
legislation, known as The Secure and Fair Enforcement (“SAFE”) Banking Act, which would
shield financial services companies from providing services to companies legal under state
law. However, Crapo suggested that he may draft his own bill rather than amend the
Merkley and Gardner legislation. The House Financial Services Committee has passed its
own version of The SAFE Banking Act, and similar language was included in an
appropriations bill that passed the House in June, although would not become codified
Next Steps: Debate among House Democrats on whether more comprehensive cannabis
reform (to include criminal justice reform measures) should be included has kept a
standalone bill from proceeding to the House Floor. However, these differences are
expected to be resolved and the bill will likely proceed to a vote before the full House of
Representatives the week of September 23rd.
Senate Democrats are similarly split. It is unclear if Senate Republicans will provide
sufficient support to make up for defections among Democrats. Crapo has long sought a
legislative fix to protect against actions like “Operation Choke Point,” when the Obama
Administration investigated banks doing business with firearm dealers, payday lenders, and
other companies it believed were high risks for fraud and money laundering. Adding a
provision barring choke point-like actions, as well as protections for hemp businesses,
could help build GOP support. While it is unlikely Senate Majority Leader Mitch McConnell
(R-KY) spends any Floor time on cannabis, a strong vote in the Banking Committee could
ensure that a measure similar to The SAFE Banking Act passes in appropriations or other
must-pass legislation. Senator Gardner has been pushing the bill to boost his re-election
efforts next year.
More information below:
Although Chairman Crapo does not support de-scheduling cannabis, his support for
legislation related to financial services stems from providing certainty to ancillary
businesses that provide services to the cannabis industry.
In an interview yesterday, Treasury Secretary Steven Mnuchin brought attention to Choke
Point-like measures when he criticized banks for restricting services to some clients,
particularly the gun industry. Mnuchin differentiated between banks and other private
businesses, saying “it’s not the role of banks to discriminate against any laws. Banks have
a different obligation because they take insurance from the government.”
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