Federal cannabis banking reform will likely pass the House of Representatives with strong bipartisan support, U.S. Rep. Ed Perlmutter (D-Colo.) recently explained to an industry group in Denver.
Several of my Simplifya colleagues and I heard Perlmutter discuss his vision for the future of cannabis banking at the Aug. 22 CannaGather event in Denver.
If signed into law, Perlmutter’s proposal, known as The SAFE Banking Act of 2019 (H.R. 1595), would remove many of the restrictions that currently prevent cannabis businesses from receiving access to standard financial services from banks and other institutions.
Many banks refuse to serve cannabis businesses because federal statutes prohibit handling funds related to illegal activity. Cannabis remains federally illegal and because of that, many banks view serving the industry as too risky from a legal and financial perspective.
At its core, the SAFE Banking Act would reduce the legal hurdles currently preventing many banks from serving cannabis business in states with legal markets.
The House Financial Services Committee met in March 2019 to consider amendments (relevant video begins at the 3 hour, 58 minute mark) to Perlmutter’s cannabis banking legislation. At that meeting, known as a markup, the committee passed the SAFE Banking Act bill by a vote of 45-15, with support from both Democrats and Republicans.
The committee’s vote means that Perlmutter’s bill passed a key hurdle that may ultimately lead to a full House vote on the measure.
Given the strong bipartisan support for the bill at the committee level, Perlmutter predicted that the SAFE Banking Act could garner support from as many as 250-300 House members when it comes up for a vote. Typically, a House bill passes the chamber with just 218 votes.
Perlmutter added that, of those 250-300 votes, up to one-third of that total is likely to come from Republican members, which is significant given the GOP has typically moved more slowly to embrace cannabis reform than their Democrat peers.
Senate Cannabis Banking Bill
At the event, Perlmutter received a question regarding the Senate version of the SAFE Banking Act. “My job is to get it out of the House,” Perlmutter responded, before adding that he’s optimistic about the legislation’s prospects in the Senate.
However, getting a cannabis reform bill passed by the Senate remains a tricky proposition. The Senate is controlled by a Republican majority, many of whom are leery of tackling cannabis reforms of any kind at the federal level.
Evidence of the bill’s uphill battle to getting passed is that the Senate Banking, Housing, and Urban Affairs Committee has already held a hearing on the measure, and only one Republican, the committee’s chairman, attended the hearing.
Hemp Provisions Key
Perlmutter also indicated that the SAFE Banking Act’s pro-hemp provisions could be key to getting the Senate version passed.
While the 2018 Farm Bill technically legalized low-grade THC hemp, many entrepreneurs and manufacturers remain confused about hemp’s legality. Perlmutter discussed the provisions in the SAFE Banking Act that address banking issues related to hemp, adding that those provisions may provide a pathway to the Senate passing the SAFE Banking Act.
Allaying Bank’s Fears
Overall, Perlmutter views his SAFE Banking Act as a way to reduce hurdles that prevent many cannabis businesses from using traditional banks and other financial service institutions.
During the CannaGather event, an audience member asked if banks will still balk at serving cannabis businesses, even if the SAFE Banking Act becomes law. Perlmutter said he worked with many federal agencies to draft the bill in order to address other legal concerns that arise when banks handle funds for cannabis businesses.
Perlmutter acknowledged the SAFE Banking Act is a rather narrow measure, and that falls short of the hopes of many in the cannabis industry. However, he views his cannabis banking legislation as a first step that will help pave the way for future reforms.