With a 45 to 15 vote Thursday, the House Financial Services Committee has advanced a major federal marijuana reform bill that would significantly expand legal cannabis businesses’ access to financial services. The Secure and Fair Enforcement (SAFE) Banking Act is just the third standalone cannabis bill to clear a congressional committee. And while no floor action is currently scheduled, a Democratic majority and an unprecedented 152 co-sponsors makes lawmakers confident that the SAFE Act will clear its full House vote easily and put pressure on the Senate to take action.
Landmark Cannabis Banking Bill Kicks Off Federal Marijuana Reform Agenda
One of the most substantial obstacles blocking cannabis industry growth has been its lack of access to even the most basic financial services. Federally backed and regulated financial institutions have been extremely reluctant to take on cannabis industry clients, despite wanting to, since doing so would expose them to federal money laundering and other financial crime charges.
Without access to banks, cannabis companies have largely operated on a cash-only basis, covering everything from payroll to taxes to inventory with liquid capital. The security, safety and transparency problems this gives rise to have been well-documented. And the industry, along with banks, have long been hard at work advocating for changes to federal banking rules.
On Thursday, that work paid off. Committee lawmakers overcame Republican opposition, leveraging the House’s new Democratic majority, and voted to advance the SAFE Act to a full floor vote. And unlike the standalone cannabis bills advanced by committee last year that never saw action on the House floor, there’s enough bipartisan support behind the SAFE Act to carry it through a vote.
For many Finance Committee members and the SAFE Act’s primary sponsors, that vote can’t come soon enough. At the start of Tuesday’s committee proceedings, Chairwoman Maxine Waters (D-CA) said the bill “addresses an urgent public safety concern for legitimate businesses that currently have no recourse but to operate with just cash.” And before the vote, slated for Tuesday but delayed until Thursday morning, lead sponsor Rep. Ed Perlmutter (D-CO) said “it is our job to address this and no longer ignore it. I have brought this legislation up for six years.”
Diversity and Equity Amendments Added to Banking Bill
Leading into and during committee markup of the SAFE Act, Democratic lawmakers filed amendments to beef up the bill and expand its reach. Several of those amendments passed, while others, filed by Republicans aiming to delay or restrict the bill, were defeated in voice votes or withdrawn.
The core of the bill prohibits federal banking regulators from punishing or prosecuting financial institutions that work with cannabis businesses that are state-legal, legal under municipal law or legal under tribal law. Late additions to the bill clarified those protections by specifying the exact financial services it covers.
Other add-on amendments that were adopted via voice votes would aim to improve equity and diversity in the cannabis industry. One such amendment, filed by Perlmutter, would require the federal government to study and recommend measures to improve access to financial services for minority-owned and women-owned cannabis companies.
Increasing equity and diversity in the cannabis industry has been a focal point for reform advocates seeking legislative redress for the harm and damage stemming from the racist enforcement of marijuana laws. Lack of access to capital, including financial services like small business loans, has been a major roadblock for minority entrants into the legal market.