The multibillion-dollar U.S. cannabis industry is poised to cross a historic threshold Wednesday with a scheduled U.S. House vote on a bill that would permit financial institutions to serve state-legal marijuana businesses without fear of federal punishment.
The vote would mark the first time a standalone marijuana bill has come before the full House.
And it would also mark the culmination of a six-year effort by the MJ industry that has long pushed for cannabis banking reform.
For years, cannabis businesses have struggled to obtain bank financing for acquisitions, operations and expansion, and those that get such financing often pay exorbitant rates.
Industry officials are confident they have the two-thirds majority support needed to pass the measure, known as the SAFE Banking Act.
The bill, championed by U.S. Rep. Ed Perlmutter, a Colorado Democrat, and others has 206 co-sponsors; it will need roughly 290 votes to pass.
If the vote fails, there is a backup plan to route the measure through the House Rules Committee and have it voted on again with only a simple majority required for passage, according to lobbyists.
Wednesday’s vote, however, could prove to be more symbolic than substantive.
It’s unclear whether House passage alone would loosen up traditional financial banking services for a cannabis industry that deals mostly in cash at great security risk.
That’s because the prospects for cannabis banking legislation in the Senate are far from certain.
MJ lobbyists’ reactions
“While passage in the House alone may give some smaller institutions a push toward working with the cannabis industry, the vast majority want these changes codified in law before moving forward,” Morgan Fox, media relations director of the National Cannabis Industry Association (NCIA), wrote in an email to Marijuana Business Daily.
“Banks tend to be very risk-averse, and approval in one chamber likely does not provide the assurances they require.”
Members of the American Bankers Association (ABA), which supports the measure, have said much the same thing in congressional testimony.
But the House vote could have an influence on whether the Republican-controlled Senate takes up a similar measure before the year’s end.
“What happens on the (House) floor will help us know where the starting point is in the Senate,” said Saphira Galoob, executive director of the National Cannabis Roundtable (NCR) and CEO of The Liaison Group, a cannabis lobbying group.
“So strong Republican support will be helpful.”
A new provision in the SAFE Banking Act that specifically addresses the hemp industry, and a section that covers national security concerns, both are expected to help attract Republican support, such as lawmakers from rural areas.
Senate Banking Chair Michael Crapo, an Idaho Republican, recently said he wants his committee to vote on a cannabis banking bill before the end of the year.
Major industry associations – the Cannabis Trade Federation (CTF), the NCIA and the NCR – all report they have been working hard behind the scenes, focusing especially on lawmakers considered to be toss-ups or leaning yes.
“We have our entire federal lobbying team and every employee in the entire organization all hands on deck to generate as much support for SAFE as possible heading into the floor vote,” Neal Levine, chief executive officer of the Cannabis Trade Federation, wrote in an email to MJBizDaily.
David Mangone, policy director for The Liaison Group, noted that SAFE has attracted tremendous support from outside the cannabis industry as well, including niche insurance, real estate and electronic payment processing organizations.
The ABA has for some time urged Congress to pass the SAFE Banking Act, most recently in a letter addressed Tuesday to House Speaker Nancy Pelosi, a California Democrat, and House Minority Leader Kevin McCarthy, a California Republican.
The ABA and cannabis industry officials cite the following advantages to passing cannabis banking reform:
- Reduce cash-motivated crimes.
- Improve the financial transparency of the cannabis industry.
- Increase the efficiency of tax collections.
Possible diversity issues
Some civil rights groups want Congress to address comprehensive reform with social justice provisions first, rather than cannabis banking, which is seen as mostly an issue benefiting the marijuana industry.
So it’s unclear whether SAFE could lose some votes from progressives on Wednesday.
But Steven Hawkins, executive director of the Marijuana Policy Project, wrote in a statement that SAFE also will bolster equity in the industry.
“Denying access to banking is making it harder to increase the diversity of the cannabis industry,” Hawkins wrote in the statement.
“Passing this legislation would provide resources for those with limited access to capital and increase the chances of success for state-level social equity initiatives.”
Jeff Smith can be reached at [email protected]