Federal legislation that would permit financial institutions to provide banking services to legal cannabis businesses has been dropped from a bill designed to foster competition with China, marking the sixth time the cannabis banking provisions have failed to gain the approval of the U.S. Senate after being passed by the House of Representatives.
Known as the Secure and Fair Enforcement (SAFE) Banking Act, the legislation would have permitted banks and other financial institutions to serve companies in the legal cannabis industry. Under current regulations, providing traditional banking services such as loans and payroll, checking and deposit accounts is tightly regulated by the federal government, resulting in few financial institutions agreeing to work with marijuana businesses. Critics note that the current policy forces cannabis companies to operate primarily in cash, leaving the businesses vulnerable to crime.
The SAFE Banking Act was first introduced in Congress by Democratic Rep. Ed Perlmutter of Colorado in 2013. Since then, the House of Representatives has passed the bill six times as either a standalone bill or attached to other legislation. But the measure has failed to gain the approval of the Senate.
Most recently, the House approved provisions of the SAFE Banking Act in February as part of the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength Act of 2022 (America COMPETES Act), a bill to support U.S. manufacturing and improve competitiveness with China. But on Thursday, Punchbowl News reported that the cannabis banking provisions have been dropped from the latest version of the COMPETES Act, which is currently in conference committee with House and Senate lawmakers. The report noted that the SAFE Act language had been dropped at the insistence of Republican negotiators.
“In the wake of the Senate’s inaction, people continue to be killed, businesses continue to be robbed, and employees and business owners in the cannabis industry continue to be excluded from the financial system,” Perlmutter, the lead sponsor of the SAFE Banking Act, said in a statement quoted by The Hill.
Activists and Industry React
After news that the legislation had not been included in the latest version of the COMPETES Act Morgan Fox, the political director for the National Organization for the Reform of Marijuana Laws (NORML), said that it “is mind-boggling that this is now the sixth time that SAFE Banking has been approved by the House but stalled by the Senate.”
“This narrowly tailored, incremental, and necessary legislation has broad bipartisan support in both chambers, and it is incredibly disappointing that politics continue to get in the way of saving lives and helping struggling small businesses disrupt and ultimately replace the underground cannabis market,” Fox said in a statement from the cannabis policy reform advocacy group. “If there is a legislative version of the Twilight Zone, the SAFE Banking Act seems to be stuck in it at this point.”
Some supporters of the legislation including Michael Sassano, CEO and founder of cannabis products manufacturer Somaí Pharmaceuticals, believe that Congress is missing an opportunity to make people who work in the industry safer.
“Congress continually drops the easy play by going for an all-or-nothing strategy,” Sassano writes in an email to High Times. “Avoiding the SAFE banking act only shows that they don’t care about the cannabis industry and the safety of our employees, but rather their pet projects that get embedded in every failed law they try and pass.”
Despite Thursday’s setback, representatives of the regulated weed industry have not given up on the cannabis banking bill, with hopes that lawmakers will add the legislation to an upcoming spending package.
“The support and political will is there to get the SAFE Banking Act across the finish line. We are encouraged by conversations about pairing the bill with other helpful cannabis and criminal justice reforms,” Steven Hawkins, president of the U.S. Cannabis Council, said in a statement. “We look forward to working with our members and allies to help get the job done.”
But Fox noted that the opportunity to pass meaningful federal cannabis reform this year is fading as the nation and the Congress head into the 2022 midterm election season.
“There are still some pathways available to get SAFE Banking approved in the current congressional session, but time is running out,” Fox added. “The Senate should not waste this rare chance for bicameral and bipartisan cooperation that would improve safety and opportunities for hundreds of thousands of people and foster economic development in a majority of states.”
Perlmutter, who in January announced he will not seek reelection this year, vowed to continue working to get the cannabis banking measure passed before he leaves Congress.
“I will continue to push for #SAFEBanking to be included in COMPETES, other legislative vehicles, or for the Senate to finally take up the standalone version of the bill which has been sitting in the Senate for three and a half years,” Perlmutter tweeted on Thursday.