Cannabis banking bill clears Senate panel despite Dem fractures, GOP qualms

WASHINGTON (CN) — The Senate took yet another step Wednesday to relax federal restrictions on marijuana, as its banking committee voted to advance a measure that, if made law, would grant cannabis businesses access to banking services.

The sweeping legislation, known as the Secure and Fair Enforcement Regulation Banking Act, cleared the Senate Committee on Banking, Housing and Urban Affairs on a bipartisan 14-9 vote.

If made law, the bill, abbreviated as the SAFER Banking Act, would bar banks from refusing financial services to state-authorized marijuana businesses based on industry alone. The measure would also offer legal protections for institutions that provide financial services or insurance to cannabis businesses.

For some lawmakers, the legislation is a necessary step to help a growing industry that has so far been stifled by a cash-only business model.

Ohio Democrat Sherrod Brown, who chairs the Senate’s banking panel, said during a bill markup Wednesday that forcing cannabis businesses to be completely liquid is a public safety issue.

“Employees become targets for violent robberies, which under the most devastating circumstances can turn deadly,” Brown said, adding that the cash-only model also proves a challenge for cannabis workers who are looking to rent a home or apply for a mortgage.

“The focus is on workers,” the lawmaker said.

Oregon Senator Jeff Merkley, a Democrat and co-sponsor of the bill, said allowing marijuana businesses to use banking services would help to curb organized crime in the industry.

“Unbanked operations operating in cash is the easiest way to engage in all sorts of organized crime activities, including expanded activities in areas other than cannabis, like fentanyl,” Merkley said. “If anything, this bill will help.”

The lawmaker added that the bill’s language will prevent federal banking regulators from behaving like “moral police.”

“They shouldn’t be deciding that legal businesses should be unbanked simply because they don’t like the business that they’re in,” Merkley said. “This bill sends a powerful message in that regard.”

Committee Republicans backing the legislation couched their support in terms of public safety interests. Montana Senator Steve Daines, the measure’s GOP co-sponsor, said he was opposed to efforts to federally legalize or decriminalize marijuana. The bill in question, he argued, was not about that.

“This bill is about public safety, first and foremost,” Daines said, reiterating concerns that cash-only businesses are prime targets for theft and organized crime. “The key to addressing this risk is by ensuring that all legal businesses have access to the banking system.”

The Montana Republican also expounded on the bill’s language barring industry-based discrimination by financial institutions, arguing that such a model could be expanded beyond cannabis businesses.

“This legislation takes an important step forward in ensuring that regulators never again have an opportunity to target any legal business, Daines said, “including gun manufacturers and distributors, or energy companies, because of political differences.”

The senator was referencing Operation Choke Point, a 2013 Justice Department initiative which investigated banking institutions that provided services to gun manufacturers and other businesses the federal government considered fertile ground for money laundering schemes. Critics of the effort, including congressional Republicans, said the government was putting undue pressure on the financial industry.

Despite bipartisan support for the cannabis banking bill, lawmakers on both sides spoke out against the measure Wednesday, arguing — albeit in different ways — that it would actually do more harm than good.

Idaho Republican Mike Crapo, citing Operation Choke Point, argued that the bill’s provisions barring financial regulators from putting their finger on the scales do not go far enough.

Offering an amendment to the legislation, the lawmaker said that banks should not be forced to rescind a company’s banking access based on reputational risk concerns — whether possible financial losses related to negative publicity or stakeholder opinions.

“You cannot force our financial institutions in this country to cease banking clients because their industry is disfavored,” Crapo said.

Rhode Island Democrat Jack Reed pushed back on his colleague’s argument, saying that tighter restrictions on blocking banking access “would undermine the ability of regulators to effectively anticipate problems in banks and correct them because they cause harm to consumers or to the bank itself.”

The committee ultimately voted to strike down the Crapo amendment.

Meanwhile, some of the most vocal opposition to the cannabis banking bill came from committee Democrats. Georgia Senator Raphael Warnock emerged as a vocal critic of the measure, arguing that it was designed to protect the interests of wealthy bankers and big businesses and that it didn’t address a root problem — the incarceration of nonviolent drug offenders.

“I find it a tragic irony that we’re calling this the SAFER banking bill,” said Warnock. “For me, it begs the question: who does the so-called SAFER banking bill actually make safer? Certainly not the millions of Americans locked up for nonviolent drug offenses.”

The Georgia Democrat suggested that, if made law, the legislation would pave the way for the consolidation of the cannabis industry under large companies, pushing profits away from low-income communities that have been disproportionately harmed by U.S. marijuana policy.

“It seems to me that if this committee is to take seriously addressing our nation’s broken cannabis laws and to seek true equity, then I submit that the only legislative priority cannot just be to … protect financial institutions serving this new industry,” Warnock said. “We must look to make whole the communities across the country that have been hollowed out and are being hollowed out in real time by the war on drugs.”

Massachusetts Senator Elizabeth Warren agreed, saying that while she supported the bill’s underlying premise, it “does little or nothing to address the harms of marijuana criminalization, particularly for Black and brown communities.”

The Democrat echoed Warnock’s concern that the measure would help massive cannabis businesses push minority-owned companies out of the market.

“This bill may reinforce inequities by helping white-owned cannabis businesses grow their profits while Black and brown people are still being arrested for simple marijuana possession,” Warren said.

Warnock offered an amendment to the bill that would sunset its policies after a five-year period, unless the government can “demonstrate that they have actually made life better” for affected communities. The committee voted against the proposed change.

Senator Merkley, for his part, said the proposed legislation was designed as a first step to addressing the damage done to vulnerable communities by the unequal enforcement of marijuana laws. He added that he was also concerned about the consolidation of marijuana businesses and said that Congress should do everything possible “to keep small businesses engaged.”

Ultimately, Warnock was the only Democrat to vote against the bill. Senator Daines, alongside Wyoming Senator Cynthia Lummis and North Dakota Senator Kevin Cramer, broke ranks with their fellow Republicans and voted in favor of the measure.

Wednesday’s markup was the second time in as many weeks that Congress has considered legislation aimed at lowering federal marijuana restrictions. The House last week advanced a measure that, if made law, would prevent federal agencies from disqualifying job applicants who have previously used cannabis.

The Department of Health and Human Services has also said that the federal prohibition on marijuana should be relaxed — recommending in August that cannabis be downgraded from a Schedule I controlled substance to Schedule III.

Follow @BenjaminSWeiss

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Cannabis banking bill clears Senate panel despite Dem fractures, GOP qualms

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