Despite overwhelming bipartisan support from US House representatives and state governors, the US Senate has killed an amendment that would have guaranteed safe banking for the cannabis industry.
This fall, the House of Representatives voted to add the Secure and Fair Enforcement (SAFE) Banking Amendment to the 2022 National Defense Authorization Act (NDAA), an annual budget bill that Congress must pass to fund the entire US military. This amendment would grant safe harbor to banks that work with state-legal medical or adult-use cannabis businesses.
Under current federal law, any financial institution that opens an account for a business that handles any Schedule I drug, including marijuana, can be charged with money laundering. This prohibition blocks financial institutions from offering banking accounts, loans, payment processing, or any other service to cannabis businesses, regardless of their compliance with state law. However, in 2014, the US Department of Treasury issued guidelines that permitted banks to open accounts for licensed cannabis operators, though most banks have ignored the guidelines in deference to federal law.
The House has already passed the SAFE Banking legislation on five separate occasions, either as an amendment or as a standalone bill. Senate Majority Leader Chuck Schumer (D-NY) has refused to advance the bill, though, arguing that Congress should legalize cannabis entirely instead of implementing minor reforms. Schumer is spearheading a bill that would end the federal prohibition of marijuana, but it is uncertain that President Biden would actually sign off on such a sweeping reform.
“I don’t really quite know what the hell [Schumer's] problem is,” said Rules Committee Chairman Jim McGovern (D-MA), Marijuana Moment reported. “But what he’s doing is he’s making it very difficult for a lot of small businesses — and minority-owned businesses, too — deal with the issue of cannabis to be able to move forward and to expand and to hire more people.”
Last month, 24 governors of US states and territories penned a letter to Congress demanding that lawmakers include the SAFE Banking Amendment in the final defense bill. But following Schumer's lead, the Senate chose to exclude the amendment from their version of the defense bill. And this week, a conference committee tasked with unifying the two chambers' versions of the bill also chose to strip the amendment from the NDAA.
“Precisely why the majority leader, Mr. Schumer, is opposed to this is still pretty much a mystery to me,” said Rep. Ed Perlmutter (D-CO), chief sponsor of the legislation, according to Marijuana Moment. “It makes no sense because of the public safety aspect, the minority business aspect. Without the ability to have banking, many small businesses — veteran-owned organizations, women-owned businesses — don’t have access to capital.”
With no access to banking services or credit card payments, legal weed shops are also forced to operate on a cash-only basis. Criminals are now well aware that every legal pot shop in the country is likely to have large amounts of cash and weed on hand, and dispensary robberies are becoming commonplace. In Oregon, cops recently discovered a burglary ring that was solely focused on robbing legal cannabis businesses in the Pacific Northwest.
“You have heard my ire and my irritation and my anger because people are getting killed,” Rep. Perlmutter said. “They’re getting robbed. And we’re making no moves. We now have made some advancements, but this thing’s been sitting there for three years.”
San Francisco and the surrounding Bay Area has also been hit by a recent wave of dispensary burglaries, and local police are doing nothing to stop these crimes. To help its local pot industry survive, San Francisco's legislative board voted to suspend municipal cannabis taxes until the end of 2023. And the city of Portland, Oregon just created a program offering $1.3 million in grants to businesses impacted by burglaries, wildfires, and the pandemic.
But other than these two cities, no state or local government has been able to come up with effective solutions that would resolve the cannabis industry's issues with crime or banking. All eyes are now on Congress, but the chances of passing cannabis banking reforms this year seem slim.
Rep. Perlmutter is not ready to give up hope, though, and is planning to file an amendment to the NDAA that would add the SAFE Banking provisions back into the bill. Perlmutter is now working with House Speaker Nancy Pelosi (D-CA) to find ways to force the Senate to accept the importance of passing this bill immediately.