Cannabis industry groups were heartened Thursday to hear bipartisan support from members of the U.S. Senate Banking Committee for marijuana banking reform – particularly, passage of the Secure and Fair Enforcement (SAFE) Banking Act.
The Democratic-controlled banking panel convened the hearing about the challenges that a largely cash-based industry poses to small businesses and employees.
If lawmakers were to approve the SAFE Banking legislation, federal banking regulators would be prohibited from punishing financial institutions that offer basic banking services to marijuana businesses following state law.
While the outlook for passage appears better than in previous years, industry officials and congressional watchers say that approval is far from assured.
“The hearing showcased thoughtful discussion from members on both sides of the aisle, with a consensus among witnesses that the bill could go further to be most impactful, which should include providing broader access to financial services during committee markup,” Saphira Galoob, executive director of advocacy group National Cannabis Roundtable, said in a statement.
Sen. Elizabeth Warren, a Massachusetts Democrat, said at the hearing that SAFE Banking is “long overdue” but that she is also working on the descheduling of marijuana.
“If people can still get busted for purchasing marijuana, many banks will find it too risky to serve legal cannabis businesses, no matter whether we tell them it is technically OK,” she added.
Sen. Steve Daines, a Republican from Montana who reintroduced the legislation last month with Sen. Jeff Merkley, D-Oregon, emphasized the safety risks of cash transactions in marijuana businesses, which are vulnerable to burglaries.
“To enter the banking system will help law enforcement more easily distinguish legitimate actors and focus more of their resources on prosecuting the illicit market.”
Support for SAFE
At the same time, Senate Majority Leader Chuck Schumer, along with two Democratic colleagues, endorsed adding marijuana expungement legislation to the SAFE Banking measure.
“We were encouraged to see the SAFE Banking Act reintroduced last week after Senator Daines and Senator Merkley worked to make key improvements to the legislation,” Schumer said in a statement along with Oregon Sen. Ron Wyden and New Jersey Sen. Corey Booker.
“We look forward to watching this legislation progress through the Banking Committee and working with bipartisan partners to include additional improvements, such as the Harnessing by Pursuing Expungement (HOPE) Act, which would support states that want to expunge cannabis record with grants.”
Witnesses Merkley and Daines were joined by:
- Ademola Oyefeso, international vice president and director of the legislative and political action department at the United Food and Commercial Workers International Union (UFCW).
- Michelle Sullivan, chief risk and compliance officer at Dama Financial.
- Kevin Sabet, president, CEO and fellow at Smart Approaches to Marijuana.
- Cat Packer, the vice chair at the Cannabis Regulators of Color Coalition.
During the worker- and small business-focused hearing, Packer and Oyefeso shared with the committee how barriers to banking and financial services harm cannabis employees and efforts to create equitable business opportunities.
Workers who are paid in cash are vulnerable to theft, Oyefeso said, and some employees aren’t able to show adequate proof of employment to qualify for mortgages or leases. Others can’t secure loans, he said.
Giving cannabis workers better banking services would give them better financial stability, he said.
“Cannabis workers do not deserve to be treated as criminals,” Oyefeso said, “and should not have to struggle with financial and legal ambiguity on the job.”
Packer urged Congress to push for more comprehensive reform beyond banking, which she said was the only way to adequately address the harms of federal prohibition.
She added that the SAFE Banking Act could be more equitable if it included language ensuring that previous marijuana convictions wouldn’t be “red flags” used to reject loan applicants or those seeking access to financial services.
“It’s true that small businesses and workers can’t afford to be shut out of banking,” Packer said.
“But it’s also true that they can’t afford for disparities in traditional banking to become the new norm for cannabis banking.”
Arguments against SAFE
Kevin Sabet of Smart Approaches to Marijuana chastised the committee for hearing the issue at all, arguing that there are more pressing issues, such as opioids and teen mental health, that the senators should be dealing with.
Sabet testified that SAFE would ultimately hurt Americans by helping the industry, which he said is creating dangerous products.
“This bill would open up the marijuana industry to Wall Street hedge fund managers and Silicon Valley investors who will create even more hazardous products to get them into the hands of even more Americans,” he said.
Charlie Bachtell, the founder and chief executive officer of Chicago-based Cresco Labs, attended the hearing and lamented that operators weren’t among the witnesses.
In an interview with MJBizDaily, he urged industry members to contact their local representatives and legislators and advocate for banking reform.
But Bachtell said it was still important to note that the Senate was finally hearing the measure after it had already passed through the House of Representatives seven times in recent years.
“I think today’s testimony,” he added, “especially by Cat Packer, making the point of access to capital is really the significant roadblock to achieving public safety, and a more diverse and inclusive industry is an important part we’d like to see included as they think about how to get it to its final form.”
Kate Robertson can be reached at firstname.lastname@example.org.