Helping banks play SAFE while serving the cannabis industry: Q&A with Congressman Ed Perlmutter

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U.S. Rep. Ed Perlmutter, a Colorado Democrat, introduced legislation six years ago to provide federal protection to financial institutions that serve state-legal marijuana businesses.

No one in Congress would give him the time of day.

“Every time you brought marijuana up, there would be a chuckle,” Perlmutter recalled. “‘Oh, you’re from Colorado. Rocky Mountain High’ – all this kind of stuff.”

But as more states legalized medical or adult-use marijuana, “folks realized it is a serious question here that has to be resolved. It’s not just joking around,” Perlmutter said.

How serious? The now Democratic-controlled House Financial Services Committee recently gave the SAFE Banking Act a hearing and then advanced the bill by a conclusive 45-15 vote. (Click here to read more about the SAFE Act and other potential federal reforms.)

That sets up what Perlmutter, a primary sponsor, believes could result in full House passage within six weeks.

Marijuana Business Daily talked with Perlmutter in his district office in Jefferson County, Colorado, during a congressional recess this month.

Legal marijuana markets for the most part are thriving. Is there an urgency to getting banking reform done in this session?

We actually had some guys come in from the city of Desert Hot Springs (California). They wanted to show me pictures of where some guys a couple of weeks before had come in with two suitcases of money to pay their $1.2 million in taxes. It took (the officials) three days with two money counters to count $1.2 million.

There is a lot of cash that is out there not going through the banking system, potential for robbery, assault. It’s high for skimming and fraud is high, and so the basic reasons I’ve brought this up for the last six years have not changed one bit.

If a business is legitimate in a particular state, they ought to be able to have legitimate banking services – checking accounts, credit cards, payroll, all of it.

When you talk to cannabis businesses, what do they say would be the biggest economic impact if this measure becomes law?

It depends on the state.

Some states are more mature in the development of the business, like Colorado or Washington, where a couple of financial institutions based on the Cole Memo (an Obama-era policy that adopted a hands-off attitude toward state-legal marijuana businesses) and FinCEN (Financial Crimes Enforcement Network) guidance have been willing to take the risk and go along with the compliance costs to step into the financial market.

But few and far between (have). We had a great little quote from three women-owned cannabis businesses in California who said with all the cash they were sitting ducks.

You mentioned the six-year struggle (to get a hearing). What is it about this bill that gives it more heft than similar ones you’ve introduced?

First, (former Attorney General) Jeff Sessions rescinded the Cole Memo.

No. 2, the makeup of the House of Representatives changed (to the Democrats). That’s made a big difference.

I think the really key change (in the bill) was the use of the word “proceeds.”

Somebody who’s working with the marijuana business like the landlord, lawyer or the greenhouse lighting people – the proceeds are not automatically deemed to be illicit funds under the money-laundering statute. That was a key provision (so banks are protected serving ancillary businesses).

Then Steve Stivers, one of the Republicans (from Ohio), added a section that the insurance industry considered to be very key (to protect them to do business with marijuana businesses).

That was another big change, as well as adding the payment processors – PayPal and those folks so there was the ability to do electronic processing.

How critical is the support of the American Bankers Association (ABA), the Credit Union National Association (CUNA) and others in the financial industry?

It’s very important. The banks go, “Can we take the money? Are we going to be deemed to be money launderers?”

So, we’ve got the big three – ABA, ICBA (Independent Community Bankers of America), CUNA – and then we received the support of the insurance industry.

And we have Brinks, the armored car company. Scotts Miracle-Gro. The Real Estate Roundtable. National League of Cities. Nineteen attorneys general. A number of state treasurers (and state banking supervisors).

When do you think it might go to the full floor of the House?

In the next month to six weeks. Because I’m on the Rules Committee as well as the Financial Services Committee, I’ll have the opportunity to kind of say when we want to hear it, but I’m going to do that in conjunction with the Rules Committee.

What do you think the prospects are in the House?

We’re up to 17 Republicans, 150 Democrats.

I want to get more co-sponsors, but I feel pretty good. This really is seen as a bipartisan bill, and I know my two primary Republican co-sponsors would agree with that.

But it’s not done yet. We’ve got work to do both in the Rules Committee as well as making sure we have at least 218 votes on the floor.

If it does pass the House, what do you think the prospects are for the Senate?

That’s a good question, I’d say 50-50, which is a lot higher than I thought I would predict two months ago.

You’ve got (Jeff) Merkley (an Oregon Democrat) and (Cory) Gardner (a Colorado Republican) as the primary sponsors.

They’ve got 20 co-sponsors, which is pretty darn good. With this solid support from the financial community, there’s a decent chance.

This interview has been edited for length and clarity.

Jeff Smith can be reached at