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U.S. House Adds SAFE Banking to Defense Spending Package

In a voice vote Tuesday night, the lower chamber attached cannabis banking reform as an amendment to the National Defense Authorization Act.

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Adobe Stock

As cash pertains to cannabis, the supermajority consensus in the U.S. House of Representatives is that federal regulators should not penalize depository institutions for providing banking services to legitimate cannabis-related businesses.

That consensus was unveiled during a 321-101 vote in April, when the Secure and Fair Enforcement (SAFE) Banking Act cruised to bipartisan passage in the lower chamber, which has indicated time, and time again, that the federal government has a responsibility to provide safe harbor to financial institutions servicing the industry.

But that was a standalone bill, which has yet to make progress in the Senate.

The question on Sept. 21 in the House was whether SAFE Banking should be attached as an amendment to the National Defense Authorization Act (NDAA) spending package for fiscal 2022.

While Rep. Mike Rogers, R-Ala., supported SAFE Banking as a standalone bill five months ago, he said Tuesday night it had no business hitching a ride with NDAA. Rogers is the ranking member of the House Armed Services Committee, which works hand in hand with NDAA.

“This is a fine piece of legislation in a standalone fashion,” Rogers said. “In fact, I voted for the gentleman’s standalone bill. I think what he’s trying to accomplish is admirable and should be accomplished, but not in the National Defense Authorization Act.”

Majority opinion steered from Rogers opposition, as SAFE Banking passed by a voice vote as the first amendment to be added to the NDAA package. It marks the fifth time the act has passed in the House.

In the last Congress, the lower chamber overwhelmingly passed a standalone version of SAFE Banking in 2019, and then House members passed the measure two more times as part of federal coronavirus relief bills in 2020. But the legislation stalled, in part because former Senate Majority Leader Mitch McConnell, R-Ky., never acted on calendaring it for floor debate in the upper chamber.

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Office of the Clerk, U.S. House
Rep. Ed Perlmutter, D-Colo., speaks on SAFE Banking Tuesday night on the House floor. 

In his opening remarks Tuesday as the chief author of the bill, Rep. Ed Perlmutter, D-Colo., offered the amendment as the identical version of the standalone act that passed in April.

“This will strengthen the security of our financial system in our country by keeping bad actors like foreign cartels out of the cannabis industry,” he said. “But most importantly, this amendment will reduce the risk of violent crime in our communities. By dealing in all cash, these businesses and their employees become targets for robbery, assaults, burglaries and more.”

Perlmutter said getting cash off the streets would improve safety in communities. In his home state, Perlmutter referenced Travis Mason, a 24-year-old husband and father of three when he was working as a security guard and killed during a 2016 robbery attempt at Green Heart dispensary in Aurora. Mason was a Marine veteran.

After Rogers said language in SAFE Banking is not related to NDAA, Perlmutter reminded him that the matter was deemed germane by a parliamentarian.

Rep. Warren Davidson, R-Ohio, said the reason the parliamentarian ruled SAFE Banking was germane was because cartels control much of the drug trade in the United States.

“And while most states have made some legal form for marijuana, the cartels still dominate the market,” Davidson said.

Particularly in Southern California, sheriff’s departments from San Bernardino and Los Angeles counties have shed some light on the extend of the illicit market during recent eradication operations. A $1.2-billion cannabis seizure in July that resulted in 131 arrests was tied to Mexican drug trafficking organizations as well as Chinese and Armenian organized crime groups, according to LA County Sheriff Alex Villanueva. 

Davidson continued during Tuesday night’s floor session and said, “For too long in America, we’ve had a standard that said, well, you’re not going to bank ‘these people,’ are you? And who ‘these people’ are has changed. This is preventing us from stopping the cartels.”

In a letter to Senate and House leadership, cannabis advocacy organization NORML maintained that NDAA is an appropriate vehicle for SAFE Banking provisions, stating nearly one in four veterans report consuming cannabis, mostly for its therapeutic effects.

Rep. Lou Correa, D-Calif., also rose in support of the amendment Tuesday, calling it a common-sense measure.

“Cannabis customers and businesses are law-abiding citizens and entities, yet they have to pay their employees, their bills and their federal taxes with cash,” he said. “It just does not make sense.”

In his closing remarks, Perlmutter reiterated why he believes SAFE Banking is an applicative amendment, calling it a “public safety and national security matter very germane to the issues at hand.”

While SAFE Banking has gained notoriety in the House, it has yet to replicate that reputation in the Senate. Although, Sens. Jeff Merkley, D-Ore., and Steve Daines, R-Mont., are leading the charge as primary sponsors of the bill in the upper chamber, where the legislation was introduced in March and has 39 co-sponsors.

About an hour before Tuesday’s NDAA amendment session in the House, Curaleaf founder and Executive Chairman Boris Jordan told 500-plus listeners during a social media cannabis townhall to remain patient on reform efforts.

“There’s going to be another shot at this in the Senate, in terms of getting the right aspects of the bill,” Jordan said. “I can tell you that Schumer’s people, if you look at their bill in terms of the safe banking element of it, they get it. All the necessary issues are there. So, this is not going to look the way it is now.”

The Cannabis Administration and Opportunity Act (CAOA), a broader reform effort that aims to end federal prohibition, was introduced in its draft form in July by Senate Majority Leader Chuck Schumer, D-N.Y., Senate Finance Committee Chairman Ron Wyden, D-Ore., and Sen. Cory Booker, D-N.J. Industry organizations sent feedback to the Senate trio during the following weeks, and the act has yet to be formally introduced.

When CAOA was first introduced, Booker vowed to block SAFE Banking as a standalone without broader reform but later backtracked from that statement and expressed support.

During the townhall, Jordan said he believes Schumer will push SAFE Banking to the side until first giving CAOA a shot at getting passed.

“My understanding is that he’s still going to want to try to get the wider bill, but he fully understands that he’s going to have to pass something, and it’s going to have to happen before April, because after that … we go into funding season with reelections and primaries and all that kind of stuff,” Jordan said. “So, I think they’re going to try to get it through, and I think SAFE in a wider format will get through. But I think it’s probably going to get attached to another vehicle.”

While Jordan doesn’t forecast SAFE Banking getting signed into law through an amendment to the NDAA package, he said “miracles” do happen.

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