The perennial political divide in Washington remains strong, but that hasn’t stopped bipartisanship on a cannabis-related banking bill that has been absent of Senate action the past four years.
The Secure and Fair Enforcement (SAFE) Banking Act of 2023—which would allow federally regulated financial institutions to work with state-legal cannabis businesses—is now in Congress for its fifth calendar year. A group of bipartisan House and Senate lawmakers introduced the latest version of the bill April 26.
The legislation has passed the House seven times but has never seen the light of day on the Senate floor, notably with former Majority Leader Mitch McConnell, R-Ky., blocking its progress in 2019 and 2020 and more recently as attachments to spending packages in his role as minority leader the past two years. Current Majority Leader Chuck Schumer, D-N.Y., also has hindered its progress the past two years without calling a floor vote for SAFE Banking as a standalone measure.
The popularity of a standalone version of SAFE Banking is perhaps no more evident than a 321-101 House vote in April 2021—its fourth of seven passages in that chamber. More recently, it passed the House as an attachment to the America COMPETES Act in February 2022 and as an attachment to the National Defense Authorization Act in July 2022.
While Republicans gained control of the House in the November 2022 election, the 2023 SAFE Banking bill still has bipartisan support with Reps. Dave Joyce, R-Ohio, and Earl Blumenauer, D-Ore., sponsoring the legislation with four Republicans and four Democrats originally signed on as co-sponsors.
But with the history of repeated House passages, all eyes remain focused on the Senate’s next move—should there be one.
In the upper chamber, the latest version is sponsored by Sens. Jeff Merkley, D-Ore., and Steve Daines, R-Mont., who have 29 Democrats and six Republicans signed on a as co-sponsors. Democrats and Independents hold a 51-49 majority in the Senate, but the magic number is 60 votes to avoid a potential filibuster on a standalone vote.
Beyond the politics, the SAFE Banking Act would provide state-legal cannabis businesses access to the traditional and secure banking systems and financial services that are available to other industries across the nation. While a handful of local and regional banks service the cannabis industry at a premium cost, most national banks and financial institutions don’t take on that risk for fear of persecution under federal prohibition.
As a result, many cannabis business, notably smaller businesses and dispensaries, are forced to operate in cash, which has led to armed robberies, break-ins and death.
“Montanans should be able to conduct their small business without fearing for their safety,” Daines said Wednesday in a press release announcing the introduction. “My bipartisan bill would provide the security and peace of mind that legal Montana cannabis businesses need to freely use banks, credit unions and other financial products without a fear of punishment. This bill will help keep our Montana communities safe, keep crime off the streets, support Montana small businesses and bolster local economies.”
To address the safety concerns, the 2023 legislation would prevent federal banking regulators from:
- Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated cannabis business, or an associated business (such as a lawyer or landlord providing services to a legal cannabis business);
- Terminating or limiting a bank’s federal deposit insurance primarily because the bank is providing services to a state-sanctioned cannabis business or associated business;
- Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
- Taking any action on a loan to an owner or operator of a cannabis-related business.
New to this year’s version of SAFE Banking, the 2023 legislation explicitly extends the safe harbor to Community Development Financial Institutions (CDFI) and Minority Depository Institutions (MDI) to ensure they can also serve cannabis businesses. CDFI and MDI serve underserved communities who face challenges in accessing capital and provide affordable access to financial services.
In addition to the majority leadership’s willingness to bring forth a vote in the upper chamber, Sen. Sherrod Brown, D-Ohio, remains a key figure for SAFE Banking’s passage. The chairman of the Senate Banking, Housing and Urban Affairs Committee, Brown has pushed back on holding a hearing for previous versions of SAFE Banking without the inclusion of criminal and/or social justice provisions.
“No one should be thrown in jail or have their future jeopardized by a criminal record over marijuana-related, nonviolent offenses,” Brown said in a letter on cannabis policy obtained by Cannabis Business Times in late 2021.
More recently, in December 2022, Brown indicated his willingness to take up SAFE Banking in committee in 2023, Punchbowl News reported.
In a joint statement issued Wednesday, Senate sponsors Merkley and Daines said they expect to see movement on Brown’s end as well as the opportunity for other members to attach additional provisions—like expungement measures or protections for firearms—on the Senate floor. As introduced, the 2023 SAFE Banking Act only includes aspects within the jurisdiction of the Banking Committee.
“We expect SAFE Banking to go through the Banking Committee, and, on the floor, there will be an opportunity to add additional regular order passed provisions—such as the HOPE and GRAM acts—before final Senate passage,” Merkley and Daines said. “This expanded ‘SAFE Banking Plus’ package will represent the largest-ever cannabis reform legislation with bipartisan support in Congress. We are committed to making 2023 the year a bill is signed into law that ensures all legal cannabis businesses have access to the financial services they need.”
The Harnessing Opportunity by Pursuing Expungement (HOPE) Act would support states with grants that want to expunge cannabis records, and the Gun Rights and Marijuana (GRAM) Act would allow state-legal cannabis users to purchase and possess firearms. But their additions could mean losing key support needed for the 60-vote threshold to pass the underlying bill.
The banking measure comes at a time when 22 states have legalized adult-use cannabis, 38 states have legalized medical cannabis programs, and another three states, Texas, Georgia and Iowa, have limited medical programs.
Below are quotes from business and advocacy groups from around the industry:
“With a supermajority of Congress now representing a state with licensed cannabis sales, enacting this sensible and necessary legislation should be among the least controversial issues before the Senate today,” said Aaron Smith, co-founder and CEO of the National Cannabis Industry Association. “This bill is a commonsense step toward improving public safety and transparency while also opening much-needed access to capital to struggling small businesses throughout the nation.”
“Federal law has forced the nation’s $30-plus billion cannabis industry to conduct business almost entirely in cash,” US Cannabis Council Chair Jessica Billingsley said. “As a result, dispensaries have become an attractive target for armed criminals, and lives have been lost. This status quo benefits armed robbers and illicit operators—and no one else.”
“The improvements to the study and data collection provisions in the SAFE Banking Act are a welcome addition to the bill,” said Maritza Perez Medina, director of the Office of Federal Affairs at the Drug Policy Alliance. “These minor modifications to the bill will ensure that timely and more comprehensive data collection takes place to measure whether banking services are being provided in a fair way. While there remains much more work to be done, and we remain neutral on the legislation, the changes are an encouraging sign that the bill is headed in the right direction. As this legislation moves forward, more should be done to lessen the barriers to entry small marijuana businesses face in obtaining commercial lending.”
“We are delighted to see the SAFE Banking Act reintroduced with some of the changes we have been advocating for,” said Dasheeda Dawson, chair of the Cannabis Regulators of Color Coalition. “However, more needs to be done to establish a fairer playing field—especially for those that have been most harmed by prohibition and continue to face extreme barriers to entry. For example, with relatively minor changes, SAFE could ensure that marijuana criminal records are not automatically considered a ‘red flag’ or part of what financial banking regulators consider an indication that a business may be engaged in unlawful activity. Without this type of change, marijuana criminal records will continue to be a significant barrier towards participation in state-legal marijuana industries, disproportionately impacting Black, Latinx and Indigenous entrepreneurs.”
“If cannabis businesses are to have any hope of operating safely, transparently, and in a manner that is competitive with the existing underground market, Congress must pass SAFE Banking now,” NORML Political Director Morgan Fox said. “It is irresponsible to shut this heavily regulated industry out of the U.S. financial system. Every day that Congress fails to act further endangers small businesses and consumers, puts regulators and law enforcement at a disadvantage, and facilitates the activities of unlicensed operators and criminal organizations.”
