Senate Banking Committee holds marijuana banking hearing

The Senate Banking Committee held a roughly two-hour hearing May 11 with testimony from adherents and opponents of the Secure and Fair Enforcement Banking Act. 

 Last month, a bipartisan group of lawmakers reintroduced the SAFE Banking Act late last month, legislation that would free up the cannabis industry for bankers operating in states where the drug is legal. The SAFE Banking Act has already passed the House seven times, but never cleared the Senate. 

 Supporters of the legislation say it is needed to make the cash-heavy cannabis industry safer and to allow regulators and law enforcement to effectively monitor the sector and ensure cohesion between federal and state laws. They also say that employees of legal MRBs can’t prove their income and therefore have a harder time accessing credit and mortgages.

Speaking in favor of the legislation, Sen. Steve Daines (R-Mont.) said the SAFE Banking Act would allow law enforcement to clearly distinguish between the illicit and legal cannabis markets. He noted that 75 percent of the estimated $100 billion cannabis market is illicit.  

Sen. Elizabeth Warren (D-Mass.) called the bill “a long-overdue step” to help legal cannabis businesses open bank accounts, and also urged the federal government to legalize marijuana. The bill will remove much of the stigma surrounding the cannabis industry, testified Ademola Oyefeso, director of the legislative and political action department at United Food and Commercial Workers International Union.“ Cannabis workers do not deserve to be treated as criminals,” Oyefeso added.  

 While helpful, the SAFE Banking Act should be accompanied by the federal government delisting cannabis as a Controlled Substance and expunging  previous cannabis possession convictions, testified Cat Packer, vice chair of cannabis regulators at Los Angeles-based Color Coalition. Michelle Sullivan, chief risk and compliance officer at cannabis banking platform Dama Financial, said the SAFE Banking Act should be stronger and require more stringent operational requirements and reporting criteria for banks serving MRBs.

Opponents of the bill argued that the plan would lead to a more addicted population and  less safe banking system. Kevin Sabet, president and CEO of Smart Approaches to Marijuana, an organization opposed to marijuana legalization, said the legislation would drive younger consumers closer to addiction and benefit only the largest tobacco companies, Wall Street and Silicon Valley. Sabet said the legislation is unnecessary as hundreds of banks already work with MRBs.  Banking Committee Ranking Member Tim Scott (R-S.C.), cited the concerns of the Department of Justice and national law enforcement groups that the bill would create loopholes for the illicit cannabis market. 

The legislation would prohibit federal regulators from disciplining depository institutions that provide banking services to government-licensed, cannabis-related businesses and the businesses that serve them, such as plumbers or landlords. Currently, businesses that legally grow, market or sell cannabis are legally shut out of the banking system by the Controlled Substances Act and rely mainly on cash transactions. The bill would also prohibit regulators from recommending or incentivizing banks to not provide services to legal cannabis businesses or take action on a loan to either an operator or owner of a cannabis business.

Thirty-seven states have already legalized recreational or medicinal marijuana. Sen. Jeff Merkley (D-Ore.) noted that 129 robberies of Oregon cannabis businesses were reported in just the last 12 months. He emphasized that the bill would not require banks to serve MRBs, only providing them with the option of doing so.