Community leaders from across the nation are urging Congress to pass some form of a bill with bipartisan support that will protect banks that want to work with legal cannabis companies. They say the SAFE Banking Act would promote public health and decrease crime. All that remains to be seen is whether lawmakers will capitulate.
The SAFE Banking Act would protect financial institutions from federal prosecution should they choose to do business with cannabis companies operating in states that have legalized the drug. Currently there are no such protections for banks, and federal prosecutors can accuse them of laundering illicit gains if they choose to do so. That hasn’t happened so far, but SAFE Banking advocates want a strict ban on the practice.
Banks Want SAFE Banking
The SAFE Banking Act has passed in the House six times but has failed to gain traction in the Senate. Now supporters are looking for ways to implement provisions from the bill in other pieces of legislation.
Last week the Independent Community Bankers of America (ICBA), along with a coalition of 44 state community banking associations sent a letter to Senate majority leader Sen. Chuck Schumer (D-NY), Senate minority leader Sen. Mitch McConnell (R-KY), Speaker of the House Rep. Nancy Pelosi (D-CA) and House minority leader Kevin McCarthy (R-CA). The letter urged the lawmakers to include the Secure and Fair Enforcement (SAFE) Banking Act in the conference report of the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength (COMPETES) Act.
“The conflict between state and federal law has created legal uncertainty for community banks, inhibited access to the banking system for cannabis-related businesses, and created serious public safety concerns,” ICBA President and CEO Rebeca Romero Rainey said. “After the House has voted six times to pass this much-needed policy, ICBA, state community banking associations, and the nation’s community bankers urge Congress to retain it in the America COMPETES Act conference report.”
The conference committee for the COMPETES Act met for the first time in May, and multiple attendees reportedly spoke in favor of including language from the SAFE Banking Act in the final bill. Only days after the meeting, the Conference of State Bank Supervisors (CSBS) sent letters to members of Congress asking to include SAFE Banking in the COMPETES Act.
Acting President and CEO of CSBS James M. Cooper wrote in favor of enacting broad banking reform. “Safe harbor should be extended to all financial services,” he wrote, “including money transmission, as the adverse impact of the current inconsistency in state and federal law is not limited to depository institutions.”
Leaders Want SAFE Banking
Last week the U.S. Conference of Mayors held its annual meeting in Reno, Nevada. Mayors from around the country approved a resolution calling on Congress to pass the SAFE Banking Act. “Be it resolved that The United States Conference of Mayors urges Congress to pass the SAFE Banking Act of 2021 to provide financial security for cannabis dispensaries and related companies and enhance public safety,” the resolution read. The mayors went on to voice its support for the legalization of medical and adult-use cannabis.
“The support from the U.S. Mayors is a testament to the importance of SAFE Banking for the financial security of legal businesses and the public safety of cities across the country,” tweeted Rep. Ed Perlmutter (D-CO), one of the sponsors of the SAFE Banking Act.
Last week Sen. Steve Daines (R-MT), a Republican sponsor of the SAFE Banking Act, released a political ad that featured the CEO of the Montana Bankers Association, Cary Hegreberg. The ad encouraged voters to support the SAFE Banking Act even if they are opposed to cannabis legalization.
“I want to make it clear that the banking industry does not condone the marijuana law. The fact of the matter is we formally opposed the ballot measure,” Hegreberg says in the ad, referring to the passage of cannabis legalization in Montana. “Our banks—they want to do the right thing in their communities. They want to serve the businesses that are there if it’s a legal business.” The financial official said the bill would help banks do the right thing.
Feds Want SAFE Banking
Last week the U.S. Treasury Department proposed collecting financial data from cannabis sales across the country in a similar manner to how it tracks other businesses that are vulnerable to money laundering like liquor stores, casinos and car dealers.
The Treasury Department’s Office of the Comptroller of the Currency (OCC) posted a notice that it plans to track cannabis business operations in the Risk Summary Form (RSF) that financial institutions must file every year. The agency says the data will help banks assess money laundering and terrorist financing risks when working with marijuana companies.
This will be the first time that the Treasury Department has required data from banks on marijuana-related businesses. The OCC is currently looking for public comment on the plan.
Last year the U.S. Economic Classification Policy Committee recommended a policy change to include an official designation for cannabis companies in the North American Industry Classification System (NAICS). The system compiles market data on industries across North America.
With legitimacy increasing around marijuana businesses and estimates that the market will make nearly $99 billion in revenue in 2022, cannabis banking reform will quickly become an unwieldy problem if the SAFE Banking Act isn’t passed in some form this year. But it’s unclear if bipartisan support in Congress and the backing of major financial authorities will be enough to push through any major policy changes.