For cannabis entrepreneurs, 2022 may not go out with the bang they were hoping it would. For years, cannabis businesses have been banking on Congress making good on the SAFE Banking Act. The SAFE Banking Act is a landmark piece of legislation that would give the cash-only recreational marijuana industry the ability to work with banks and other financial institutions. Unfortunately, because marijuana is considered a Schedule I illegal substance at the federal level, banks cannot conduct business with legal marijuana businesses, fearing repercussions from law enforcement.
This year, hope reignited as lawmakers planned to reintroduce the SAFE Banking Act during the lame-duck session. Now it seems the lame-duck session is living up to its name as a key Senate chairman signaled that marijuana banking reform may need to be tabled until 2023.
What Is the SAFE Banking Act?
There has been an iteration of the SAFE Banking Act floating around Congress since 2013, when Ed Perlmutter (D-CO) first introduced the monumental legislation. Since 2013, the measure has been introduced and rejected at least five times.
The SAFE Banking Act is supposed to offer security and support to legal recreational marijuana businesses. Currently, cannabis businesses operating in legalized states are shut out of conducting business with banks and financial institutions. The measure would make it easier for legitimate cannabis-based businesses and entrepreneurs to access the resources of financial institutions. The goal is to move the legal cannabis industry away from an inherently dangerous cash-only model.
Federal lawmakers hoped to pass the SAFE Banking Act once and for all during the lame-duck session of Congress. Initially, lawmakers met some resistance from the Department of Justice. The law enforcement agency cited concerns with the bill, saying it could potentially open the door for illegitimate entities to gain access to financial institutions for money laundering. The organization also noted the passage of the bill could “significantly complicate law enforcement investigations and prosecutions.” However, Democratic Senate Majority Leader Chuck Schumer assured the DOJ that minor alterations to the measure would address the agency’s concerns.
A Confusing Commentary
With support from many federal lawmakers, several state leaders, and the backing of the Independent Community Bankers of America and 44 other state banking associations, the time seemed right for the passage of the SAFE Banking Act. Unfortunately, recent comments from Senate Chairman Sherrod Brown (D-OH) indicate that cannabis banking reform may have to wait until 2023.
These new comments send mixed signals to cannabis business owners, who are confused about the status of the SAFE Banking Act. In a previous interview, the senator indicated that a marijuana banking deal “absolutely could still happen,” and the lawmakers were close to negotiating a final deal on the legislation. New comments from Sen. Brown seem to contradict his previous position, with the senator claiming that he wants to “take it up and get it through” in 2023. The senator notes that there is interest in the soon-to-be Republican lead House to pass the measure.
However, if the past is any indication, Republicans have traditionally not made marijuana legalization, decriminalization, or the SAFE Banking Act a priority during their times in power. While there is some bipartisan support for the new measure, GOP leaders like Senate Minority Leader Mitch McConnell (R-KY) continue to push back on the legislation, applauding the bill’s exclusion from a must-pass defense bill. Sen. McConnell and other republicans have called the SAFE Banking ACT a “poison pill.”
Some Republican members of Congress, like Sen. Steve Daines (R-MT), say they will continue to support the standalone SAFE Banking Act. However, it remains to be seen if Republicans like Sen. Daines will hold their ground or bow to the pressure of powerful political leaders like Sen. McConnell. There is no doubt that Sen. McConnell wields enormous influence. Today the caucus seems divided. However, when push comes to shove, heavy hitters like McConnell tend to rally members and get their way.
What’s Next for the SAFE Banking Act?
The future of the SAFE Banking Act may be up in the air. Yet, there are some members of Congress still fighting for the measure. Original crusader for the SAFE Banking Act, Rep. Ed Perlmutter, says he is unwilling to give up the push and will fight to continue to seek the bill’s passage. SAFE Banking sponsor Sen. Jeff Merkley (D-OR) echoed Rep. Perlmutter’s enthusiasm and indicated he will keep fighting to get the measure across the finish line this year.
Sen. Patty Murray (D-WA) is also pushing for the passage of the SAFE Banking Act and says she recently discussed available options with Democratic leadership. She contends that “we are not done yet,” and there is hope the bill can advance before the end of the Congressional session.
Still, it is unclear whether Congress will reach a deal this calendar year. Some appropriations deals still in the works could potentially include the SAFE Banking Act, but support from Senate Republicans may be limited. In the meantime, corporate players are helping to raise awareness and push Congressional leaders to act. Additionally, a campaign from the Marijuana Policy Project is urging Americans to take a stand and let federal leaders know they support the SAFE Banking Act.
The disappointment for cannabis insiders is palpable. Running a cash-only business is both dangerous and impractical. In states like Colorado, where recreational marijuana is legal, burglaries associated with commercial retailers are increasing. Paying employees in cash is not only a potential safety hazard, but it also complicates payroll operations and employee tax withholdings.
Legal cannabis businesses still hold out hope for a solution. The SAFE Banking Act is one vital piece of that solution. It is a solution worth fighting for.
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