Legislation that would create safe banking options for businesses authorized by states to sell cannabis and related products and services got its first-ever hearing in Congress this month.
Despite the laws in 47 states authorizing some type of legalized cannabis sales, banks and credit unions tend to shun legal cannabis business due to federal prohibitions on cannabis and fears that federal regulators could punish them for banking these businesses. And while several bills have been introduced in Congress over the last several years that would create safe harbors for banks and credit unions that want to bank cannabis business, the hearing this month before the a subcommittee of the House Financial Services Committee, marks the first time such legislation has been given a hearing in Congress.
While the subcommittee hearing, held on February 13, doesn’t guarantee legislative action any time soon, it does indicate a willingness on the part of the Democratic-led House of Representatives to open the subject to debate.
The bill that’s before the House Financial Services Subcommittee on Consumer Protection and Financial Institutions – the Secure and Fair Enforcement Banking Act of 2019, or the SAFE Banking Act – was introduced by Re. Ed Perlmutter (D-CO), author of several similar bills in past sessions of Congress. Co-sponsors of the SAFE Banking Act include a cross-section of Democratic and Republican members of the House. Similar bipartisan legislation also has been introduced in the Senate.
Representatives of the Independent Community Bankers Association of America, the Credit Union National Association and law enforcement groups all appeared before the subcommittee to voice support for the SAFE Banking Act. Also testifying was California State Treasurer Fiona Ma. “[A]n effective safe harbor mechanism in federal law promotes the safety of the public, improves the efficiency of collecting taxes and fees we use to regulate the industry, and does not allow the banks and credit unions to totally abdicate their responsibilities to know their customers and avoid illicit money laundering,” Ma told the Subcommittee.
“Today’s hearing was a big deal for the thousands of employees, businesses and communities across this country who have been put at risk because they have been forced to deal in piles of cash while Congress sticks its head in the sand,” said Rep. Perlmutter. “The American voters have spoken and continue to speak, and the fact is that you can’t put the genie back in the bottle. The SAFE Banking Act is focused solely on taking cash off the streets and making our communities safer, and only Congress can take these steps to provide this certainty for businesses and financial institutions across the country.”
Perlmutter said he is optimistic the legislation will be approved by the subcommittee and the full House Financial Services Committee. Final enactment would hinge on passage by the full House and Senate. That the SAFE Act got a Congressional hearing is a step in that direction, however.