How the Cannabis Industry Hopes to Get The SAFE Banking Act Through Congress


How can Congress be persuaded to provide legal protections for financial institutions that engage with the cannabis industry? Proponents have a plan, and spoke freely about it on Tuesday at an industry event on Capitol Hill.

Step One is to round up more Republican support for a House bill that would provide such protections—the Secure and Fair Enforcement Banking Act, or SAFE Banking Act. Enough support, in fact, to pass the House with a big, bipartisan majority and impress and assure leaders in the GOP-led Senate that a cannabis-related issue won’t hurt Republicans.

At the same time, cannabis industry leaders hope to appeal to US Senate Majority Leader Mitch McConnell’s concerns over the somewhat turbulent rollout of the newly-legalized hemp industry, which has its own banking problems.

And finally, Step Three: get the banking industry and its lobbyists involved to push for hearings on the cannabis-and-banking problem. All this in hopes that the Senate will consider a discussion of the legislation and make its passage possible before the end of the 116th Congress.

The frank strategy discussion came at an event that was a part of the National Cannabis Industry Association’s annual “lobby days,” in which Association members go to Washington to learn about pending legislation and lobby their members of Congress. In this case, Representative Ed Perlmutter, a Colorado Democrat who is the primary sponsor of the SAFE Banking Act, told Association members at a morning event that there were enough votes currently in the House to pass the SAFE Act.

However, instead of pushing for a quick vote, Perlmutter said that he hopes to rally more members, particularly Republicans, to support the bill before a vote is scheduled and it moves to the Senate. The SAFE Banking Act has 182 co-sponsors so far, including twenty Republicans.

Perlmutter said he expects the bill to move to the Rules Committee within the next month and to the House floor soon after. He said he is working with individual members to see if changes or amendments to the bill can be made to win support, but he didn’t say what those changes might be. (A Perlmutter staffer told Cannabis Wire she would supply more information on the amendment’s soon.)     

“Even where we are, we’re in pretty good shape,” Perlmutter told the group of National Cannabis Industry Association members. “I’d like as strong a vote as possible to send a message to the Senate. But first we have to get it out of the House, and we will.” Asked about the challenge in passing the bill in the GOP-controlled Senate, Perlmutter responded: “I think our biggest hurdle will be the chairman of the banking committee, Chairman Crapo, and Mitch McConnell.”

Senator Mike Crapo, an Idaho Republican who chairs the powerful Senate Banking, Housing and Urban Affairs Committee, said at a meeting of bankers last month that he wouldn’t commit to moving the SAFE Banking Act through his committee, Politico Pro recently reported. Perlmutter noted that Crapo comes from one of just three states that doesn’t have a state law that conflicts with federal law on cannabis—most states have passed at least an exception for low-THC cannabis products.

And while McConnell has been a leader on legalizing hemp in the US and ensuring it becomes a mainstream crop in his home state of Kentucky, he has been careful to separate hemp from what he calls its “illicit cousin,” the marijuana plant, which contains much more THC.

But Perlmutter said that while McConnell and others believed that hemp’s legalization through the 2018 Farm Bill should have allowed hemp and CBD products to become fully integrated into the marketplace, that path hasn’t been so smooth. The hemp amendment to the Farm Bill removed the plant from the Controlled Substances Act, but banks have still been reluctant to take on hemp businesses as clients.

Perlmutter said banks’ hesitancy stems from fear of running afoul of federal regulators. Hemp is defined in the Farm Bill as having .3% or less THC content, but there isn’t an agreed upon test to determine overall THC content, experts at the event said.  

Likely making banks even more skittish, a shipment of hemp was seized in Idaho in January recently and a federal judge declined to return the shipment—even after a test determined the plant was hemp and not marijuana.  

Perlmutter and others said that after the SAFE Act passes the House, the industry should push McConnell to understand its benefits for hemp producers and banks who work with them. Last month, McConnell and Democratic Senator Ron Wyden of Oregon sent letters to federal regulators about the hemp industry’s struggle to access banks, wondering why banks were turning away hemp clients “due to confusion over the legal status of hemp,” the pair wrote. “However, as hemp is no longer a controlled substance, financial institutions should feel secure in engaging with this industry.”

In the meantime, the banking industry will continue to play a role, as the American Bankers Association and other banks are pushing Congress to pass the SAFE Act. The ABA, in particular, hopes to entice Senator Crapo to change his mind on the Act, or at least allow the bill to move forward. But they won’t push for a committee vote immediately.

“The path forward is ‘Hey, let’s have a hearing’,” Tanner Daniel, a former House staffer who is a vice president of congressional relations at the Banking Association, said at the Cannabis Industry Association meeting. “We’re emphasizing this is a safety problem. We don’t want people carrying bags of cash.”

The American Bankers Association sent a letter on Monday to Senator Crapo—signed by dozens of state banking associations—that asked the senator to hold hearings on the issue. Daniel said that even contractors for cannabis-related businesses that don’t touch the plant—say, the company that installs the lighting, for example—could still cause problems for banks.

“If banks are forced to discontinue relationships with these unrelated businesses, a significant portion of the economy in states where cannabis is legal will be cut off from the regulated banking system,” the letter says. “We appreciate that there are broader public policy questions surrounding cannabis legalization that merit debate, but we ask that you focus narrowly on the urgent banking problem at hand, which is within your power to resolve. Doing so will reap immediate public safety, tax and regulatory benefits while Congress contemplates broader decisions about national drug policy.”

At the NCIA gathering, several cannabis business owners related their own struggles with gaining access to basic banking services, such as a bank account, in the state-legal industry.

Meanwhile, lobbyists at the gathering pointed out that, in congressional terms, cannabis issues are new. The House committee’s April vote on the SAFE Banking Act—in which the House Financial Services Committee endorsed the bill 45-15—was a historic first for a major cannabis-related bill in Congress. Perlmutter and others pointed out to the anxious group that the wheels of Congress move slowly—Perlmutter pushed his bill for six years before he got a hearing. Recent progress should give the cannabis industry reason to be optimistic, but he and others also counseled NCIA members to be realistic about sweeping change happening quickly.  

Becky Dansky, the executive director of the Safe and Responsible Banking Alliance, which is focused on pushing to reform the federal banking and cannabis conflict, said people don’t realize that many Congress members have not changed their views on cannabis. “Were all in a certain place where we accept certain facts,” she told the group. “With some members of Congress we’re still dealing with Reefer Madness.”

Dansky said that among the easiest reforms for Congress to consider are veterans’ access to medical cannabis, cannabis research, and banking—especially banking. “It’s a lot less scary for some other folks because it doesn’t involve touching the plant,” she said.  

Dansky said that, currently, there are about 250 votes for the SAFE Banking Act in the House. But she hopes to work with Republicans to co-sponsor the bill before it moves any further.

“We need to focus everything in the next few weeks to get as many Republicans to support this bill as possible,” she said. “We had the votes to pass this a month ago. Now, the idea is, if you want to get something moved in both chambers, you have to show bipartisan strength.”

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