Legislation aimed at offering cannabis/marijuana-related legitimate businesses access to banking services – which would include imposing a number of requirements on federal financial institution regulators – was among the topics of scrutiny during a House subcommittee hearing Wednesday.
In its hearing on “Access to Banking Services for Cannabis-Related Businesses,” the House consumer protection and financial institutions subcommittee considered a discussion draft of legislation that would give legal cannabis-related businesses access to financial institution services and exempt from federal prosecution (or investigation) financial institutions and employees solely for providing services to state-authorized cannabis-related businesses.
The bill, the Secure and Fair Enforcement Banking Act of 2019 (SAFE Banking Act) – offered by Reps. Ed Perlmutter (D-Colo.), Denny Heck (D-Wash.), Steve Stivers (R-Ohio), and Warren Davidson (R-Ohio) – is intended to “harmonize federal and state law concerning cannabis-related businesses and allow these businesses access to banking services,” according to a draft of the bill made available by the subcommittee.
To do that, the bill bars federal financial institution regulators from taking several actions against financial institutions serving legal cannabis-related businesses, including:
- Terminating or limiting deposit insurance at a bank or credit union “solely because the depository institution provides or has provided financial services to a cannabis-related legitimate business”;
- Prohibiting, penalizing, or discouraging a bank or credit union from providing financial services to a cannabis-related legitimate business or to a state (and its political subdivisions, Indian Tribe) that exercises jurisdiction over cannabis-related legitimate businesses;
- Encouraging (in any way) a bank or credit union not to offer or to downgrade financial services to account holders solely because they own or become an owner of a cannabis-related legitimate business;
- Taking any “adverse or corrective supervisory action on a loan made to an owner or operator” of a cannabis-related legitimate business or for real estate or equipment leased to that business.
The legislation has not yet been introduced (or received a bill number).
During the hearing, Perlmutter told the subcommittee that the hearing was a “big deal” for thousands of employees of credit unions, banks and other financial institutions. He said those employees are forced to deal with piles of cash they receive from legitimate cannabis-related business, which are blocked from using the payments systems of federally regulated and insured financial institutions. Dealing with the cash, he indicated, is perilous for the financial institutions, their employees and their communities.
“The fact is, the people – the voters in states and localities all across the country – are legalizing some level of marijuana use,” Perlmutter said, after pointing out 47 states (and the District of Columbia) have legalized some form of recreational or medicinal marijuana use. That has led to the growth of legitimate marijuana-related businesses in those areas, he indicated. “We need to have these marijuana-related business and employees to have access to our banking system,” Perlmutter said.
Republicans, including Ranking Member Blaine Luetkemeyer (Mo.), suggested that the legislation “puts the cart before the horse” and that other aspects need to be addressed before this bill should be considered by Congress. Among those other aspects: de-listing marijuana from DEA’s list of schedule I drugs, which also includes heroin, LSD, marijuana, ecstasy, and peyote. According to DEA, the abuse rate of a substance is a determinate factor in the scheduling of the drug. “Schedule I drugs have a high potential for abuse and the potential to create severe psychological and or physical dependence,” according to the description posted on the agency’s website.
Democrats (including Heck) hailed the hearing, saying it is about time the committee addressed issues related to marijuana business banking at the federal level in order to provide clarity to financial institutions serving cannabis-related legitimate businesses.
Committee memo: Hearing on Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses