The U.S. Senate banking committee has advanced a bill to allow legal cannabis companies access to financial services.
The Secure and Fair Enforcement Regulation Banking bill, known as SAFER, is supported by a bipartisan group of lawmakers. It provides protections to banks and other financial institutions that provide services to legal cannabis businesses in states where it is legal.
The bill was voted out of committee 14-9. It’s the first time the legislation has advanced in the Senate, clearing an important hurdle and providing it with a — possibly quick — path to the Senate floor.
“Regardless about how you feel about states’ efforts to legalize marijuana, this bipartisan bill is necessary,” said Sen. Sherrod Brown, chair of the Senate Banking Committee, a Democrat from Ohio. “It’ll make it safer for legal cannabis businesses and service providers to operate, to protect their workers first and foremost, and to operate in their communities.”
Though regulators are reviewing its classification, cannabis is currently a schedule 1 drug at the federal level, which prohibits many financial institutions from providing services to legal companies. It has meant much of the business has been done in cash, making them vulnerable to crime.
Sen. Steve Daines, the lead Republican sponsor of the bill, is opposed to the legalization or decriminalization of marijuana, but said this bill is about public safety.
“The current all cash model of legal cannabis businesses makes him targets for theft, for tax evasion, and for organized crime. The key to addressing this risk is by ensuring that all legal businesses have access to the banking system,” he said.
Despite the bipartisan work on the bill, both sides of the aisle had some concerns.
For Republicans, a key issue was Section 10, which tackled concerns stemming from Operation Choke Point, a Justice Department initiative that investigated banks working with certain industries with high risk of fraud or money laundering, such as firearms manufactures or payday lenders.
Daines said the reforms in the section took an important step forward, “in ensuring that regulators never again have an opportunity to target any legal business, including gun manufacturers and distributors or energy companies.”
Still, the former chair of the committee, GOP Sen. Mike Crapo of Idaho, tried to change the language to say “that any federal regulator cannot force or encourage or pressure a financial business like a bank or any other financial entity to refuse to provide service to a lawful entity.”
The amendment was struck down. Sen. Reed called it a well-intentioned amendment, but added that it would “undermine the ability of regulators to effectively anticipate problems in banks and correct them before they cause harm to consumers, to the bank itself.”
On the Democratic side, some expressed concern that the bill doesn’t do enough on the restorative justice end.
Georgia Sen. Raphael Warnock said the bill doesn’t make things safer for communities that have borne the brunt of the war on drugs, or the millions of Americans convicted of nonviolent drug offenses.
While Warnock isn’t opposed to SAFER, he said that the bill should be paired with broader cannabis reforms “that substantively addressed the issue of restorative justice. This bill does not do that.”
“This is not destroying the good in pursuit of the perfect. This bill, I would argue, will make things worse,” Warnock said. “It will set the terms for a step backwards, backwards in the pursuit of equity and justice and safety.”
In the last Congress, the Senate held up an earlier version of the bill, called SAFE Banking, led by former Colorado Rep. Ed Perlmutter. Senate leaders had hoped to pass a larger bill that encompassed financial reform, as well as social and criminal justice reform. But that effort failed to move forward.
Sen. Jeff Merkley, the lead Democratic sponsor of the bill, said legislation will “start the journey” to address the unequal enforcement of cannabis laws, as well as address public safety and prevent federal regulators from deciding “that legal business should be unbanked because they simply don’t like the business that they’re in.”
“A step forward in three fronts. It’s been simple objectives, very complicated to get there. But I look forward to this going forward,” he said.