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Marijuana Banking Law Passes House; Will Senate Follow?

the cannabis leaf and money
By Christopher Coble, Esq. on September 27, 2019

After years of uncertainty regarding what legal cannabis companies can do with their money, a solution may be in sight. The U.S. House of Representatives voted Wednesday to advance legislation allowing federally regulated banks to provide services to marijuana companies in states where it is legal.

While it is not the law of the land yet, the bill demonstrates an interest in resolving one of the most problematic areas of cannabusiness. So, what's next?

Getting the House in Order

"The purpose of this Act," begins the Secure And Fair Enforcement (SAFE) Banking Act of 2019, "is to increase public safety by ensuring access to financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses." In fact, stories of piles of pot-ripe cash showing up at state departments of revenue have been circulating for years. Without access to standard business bank accounts or amenities like credit or card services, legal marijuana businesses were required to transact only in cash. That made pot stores (and efforts to pay things like revenue and employment taxes with large cash deposits) targets for crime.

The new law would make it illegal for federal regulators to "prohibit, penalize, or otherwise discourage a depository institution from providing financial services to a cannabis-related legitimate business or service provider or to a State, political subdivision of a State, or Indian Tribe that exercises jurisdiction over cannabis-related legitimate businesses." The law also prohibits other corrective actions against such banks, including incentivizing banks to not provide services to marijuana businesses like loans or lines of credit.

Potholes in the Road?

The legislation got bipartisan support in the House, passing easily by a 321-103 vote. So, what will happen in the Senate? While some financial experts remain skeptical, chairperson of the Senate Banking Committee Mike Crapo has said that he wants to advance the bill. Proponents point to the fact that the bill does not address whether marijuana should be legal or not -- only that banks can't be punished for working with those business in states that have legalized it.

That should appease many Republicans that oppose legalization. "It's a problem that keeps coming up," Florida Senator Marco Rubio said. "I think you can be against marijuana and still understand that if it's going to be a legalized product, we need to be able to control it through our banking system." There has also been little resistance from President Donald Trump, and the bill's authors included protections for hemp, designed to cater directly to Majority Leader Mitch McConnell and other hemp-industry backers who pushed hard for its legalization in the 2018 farm bill.

The Senate will now begin consideration of the SAFE Banking Act, although a future vote is uncertain.

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