A key US Senate panel on Wednesday approved a bill designed to give regulated cannabis companies easier access to common business banking services. The newly revised bill, now titled the Secure and Fair Enforcement Regulation (SAFER) Banking Act, was passed by the Senate Banking Committee by a bipartisan vote of 14-9. The measure was introduced in the Senate last week by Sen. Jeff Merkley (D-OR) and Sen. Steve Daines (R-MT). The bill is an amended version of the Secure and Fair Enforcement (SAFE) Banking Act, a cannabis banking bill that has been passed by the House of Representatives seven times over the past three years.
The legislation would ease restrictions on financial institutions that provide services to cannabis companies operating legally under state law. Under current federal regulations designed to thwart drug trafficking and money laundering, banks providing services to cannabis businesses face tight regulatory and reporting restrictions. As a result, much of the cannabis industry, particularly small businesses, is forced to operate in an all-cash environment that leaves them vulnerable to crime.
“It’s been quite a journey,” Banking Committee Chairman Sherrod Brown (D-OH) said before Wednesday’s vote to advance the measure to the full Senate. “Regardless of how you feel about states’ efforts to legalize marijuana, this bipartisan bill is necessary. It will make it safer for legal cannabis businesses and service providers to operate, to protect their workers first and foremost and to operate in their communities.”
The amended bill passed by the Senate Banking Committee is the result of months of negotiation between senators over some provisions of the original SAFE Banking Act. Key changes to the bill include a requirement that federal regulators “develop uniform guidance and examination procedures – including legacy cannabis-related deposits” and “update guidance related to hemp-related businesses and service providers.” Regulators would be prohibited from ordering banks to close an account “unless there is a valid reason.” The legislation also includes language to protect employees of state-legal cannabis businesses attempting to obtain residential mortgages funded by federal programs.
Cannabis Industry Applauds Bill’s Approval
The approval of the SAFER Banking Act by the Senate Banking Committee was warmly received by many representatives of the regulated cannabis industry, including Saphira Galoob, executive director of the National Cannabis Roundtable.
“Today’s action is not only historic but also is at a time where it could not be more urgently needed to help the regulated cannabis industry in 38 states be able to compete against the growing threat of an illicit market that greatly risks public safety and consumer safety,” Galoob said on Wednesday in a statement from the trade group. “We are heartened to see broad bipartisan support move this bill out of committee, and we look forward to momentum and support continuing to build as it moves to the Senate Floor and ultimately to the House, which has previously overwhelmingly passed the bill—at long last getting this critical measure signed into law this Congress.”
George Archos, CEO of Verano, a cannabis company with operations in 13 states, noted that approval of the SAFER Banking Act in committee follows a recent Biden administration recommendation that marijuana be reclassified under federal law to a less restrictive schedule of the Controlled Substances Act.
“Today’s move by the Senate Banking Committee to advance the SAFER Banking Act is another significant catalyst to normalize and empower the cannabis industry, one of the nation’s fastest-growing, to allow it to reach its fullest potential,” Archos said in a statement to Cannabis Now. “Following the recent rescheduling recommendation by the Department of Health and Human Services and the SAFER Act advancement, the cannabis industry is finally being appropriately recognized by the federal government as the legitimate business it is, reversing decades of failed policy and inaction that have hindered its growth despite its proven record as an economic and employment engine that benefits countless Americans and communities across the country.”
Final Passage of SAFER Banking Act Not Guaranteed
Although the SAFE Banking Act has been passed by the House as either a stand-alone bill or attached to other legislation several times, changes made in the Senate to produce the new SAFER bill could make approval of the amended measure difficult in the lower chamber of Congress. Some GOP lawmakers are threatening to vote against the bill over provisions designed to appease conservatives by protecting businesses such as gun manufacturers and other industries that some Republicans say are under attack by the Biden administration.
Under the provisions, banking regulators would not be allowed to force banks to close accounts of customers that pose a reputational risk. But a disagreement among Republicans over whether the provisions are strong enough to protect firearm, energy and cryptocurrency businesses and other changes to the bill could make passage of the amended version in the House a tough task.
“The Senate’s rewrite… throws out carefully crafted bipartisan work and crams in gross overreach to potentially crush industries not in line with the president’s agenda,” Rep. Blaine Luetkemeyer (R-MO) told Politico. “As it’s currently written, it is dead on arrival in the House.”
However, the hope remains that the House will pass this legislation after all these years and help the cannabis industry in their time of need.
“The legal cannabis industry is back to making history this week with the Senate hearing and vote on the SAFER Banking Act, says Morgan Paxhia, managing director and co-founder of Poseidon Investment Management. “It is always a proud moment as an American to see democracy at work where both parties come together and progress badly needed recognition of the cannabis industry. We believe it is important that capital markets be included if the government believes in true banking reform and we will see what happens next in the currently volatile House.”
Socrates Rosenfeld, CEO and co-founder of Jane Technologies believes that the pasing of the SAFER Banking Act and granting cannabis businesses access to traditional banking services will spur innovation, enhance transparency and drive economic growth for all. “It’s time to bridge the gap between the cannabis industry and financial institutions, empowering businesses to thrive and providing customers with seamless purchasing experiences just like when shopping for everything else in this world,” he says. “Let us embrace this historic opportunity to shape a future where the potential of the cannabis industry and the impact of the plant knows no bounds. Together, we can build a solid foundation for progress, collaboration, and the continued evolution of this dynamic market and provide access to this plant that helps millions of people around the world.”