The U.S. House voted 321-103 to pass the SAFE Banking Act on Sept. 25, the first major floor vote in Washington, D.C., for any cannabis reform legislation. H.R. 1595 will provide a safe harbor for financial institutions that work with cannabis business clients, effectively opening the door to formal banking relationships in the fragmented, federally illegal cannabis industry.
U.S. Rep. Ed Perlmutter (D-CO) has led the charge for cannabis banking reform in Congress for years. As the bill’s primary sponsor in the U.S. House, Perlmutter introduced the debate on the floor by extolling the importance of public safety—and by defining how banking protections will lead to a more secure consumer marketplace.
The vote count touched on a rare moment of bipartisan support in Congress. U.S. Rep. Steve Stivers (R-OH) pointed out that the debate necessarily focused on the public safety argument that Perlmutter brought up: "For me this bill has nothing to do with the larger debate about marijuana and whether it's a good or bad thing," he said.
Across the industry, banking reform has been hailed as a vital step forward in the development of legal cannabis businesses.
"We applaud the House for taking up this vital cannabis policy reform legislation,” Neal Levine, CEO of the Cannabis Trade Federation, said in a public statement. “The SAFE Banking Act will ensure state-legal cannabis businesses and their employees have access to the same basic banking and financial services that are available to other legal industries. Allowing the cannabis industry to access banking services will reduce its reliance on cash and greatly improve safety for cannabis businesses, employees, and consumers. It will also increase transparency and help law enforcement deter and detect illegal operations."
Rachel Gillette, partner and chair of Greenspoon Marder’s Cannabis Law Group, told Cannabis Business Times that this vote is in many ways a bellwether moment for the industry. Political tides are turning; while this U.S. House vote doesn’t mean that anything’s being signed into law or that any sweeping reform is suddenly cast across the country, the news is a symbol of broader trends in federal priorities.
First and foremost, it’s a tentpole for private business development, a major policy platform that spans the aisle in Congress.
“I don’t know that people understand the difficulty in this day and age of trying to operate a multi-million-dollar business in cash only," Gillette said. “It is a very challenging situation. If you want to go pay a bill in cash—like a utility bill for your grow facility—a lot of utility companies don’t take cash payments, so you literally have to run around or pay an employee to run around to go get you money orders to be able to pay your bills. You have to make appointments with the taxing authorities to be able to pay your taxes in cash. It makes it very difficult to be tax compliant if you don’t have a bank account. The list goes on and on. If banking was to be expanded—and this would offer protections to financial institutions that choose to offer services to state-legal marijuana businesses—it would be a big step for the industry.”
Banking reform is a major step toward normalization and some form of federal recognition of cannabis as a legitimate industry. It’s a prerequisite, in some ways, for broader reforms. Rescheduling cannabis or giving its regulatory oversight entirely to state governments—two possible shapes of federal “legalization”—would require some legitimate pathway to banking for any national industry to emerge in full.
“Denying access to banking is making it harder to increase the diversity of the cannabis industry,” Steve Hawkins, executive director of the Marijuana Policy Project, said in a public statement. “Passing this legislation would provide resources for those with limited access to capital and increase the chances of success for state-level social equity initiatives. The SAFE Banking Act is a positive step in the right direction for cannabis policy reform in the United States, and its passage will improve the likelihood that other cannabis legislation will advance in Congress.”
The U.S. Senate, on the other hand, where the bill is heading next, is a far more complicated political landscape for cannabis legislation like the SAFE Banking Act.
Where the House bill gathered 206 co-sponsors, the Senate equivalent has gathered 33 as of Sept. 24. Republicans hold a majority of the Senate’s 100 seats, making the task just that much more difficult for elected officials seeking passage of this landmark bill. Senate Majority Leader Mitch McConnell, of Kentucky, has made his opposition to cannabis well known—despite his fervent support for the legalization of hemp, as seen throughout 2018’s campaign for the Farm Bill.
“What it ends up doing in the Senate is anybody’s guess, to be honest, but it does have bipartisan support,” Gillette said. “The reality is that this is a bill that will allow banks to feel safe banking the industry, and it removes the risk of them banking the marijuana industry. Cannabis is here to stay.”