US House OK's protections for banks in states with legal cannabis businesses
The U.S. House of Representatives passed a bill Wednesday that would significantly expand the access of the legal cannabis industry to basic banking services.
The House approved the Secure and Fair Enforcement (SAFE) Banking Act of 2019, or H.R. 1595, on a vote of 321-103.
While cannabis is legal in California and in other states, it is still outlawed at the federal level. Because many financial institutions are federally chartered and regulated, they are wary of handling money generated by or giving loans to state legal cannabis businesses.
As a result, many cannabis businesses operate entirely in cash, which can create a public safety risk as an enticing target for criminals.
“The SAFE Banking Act as approved in the House would prevent federal banking regulators from punishing banks for working with cannabis- and hemp-related businesses that are obeying state laws,” according to a statement from the National Cannabis Industry Association, which has backed the bill.
“The bill would protect ancillary businesses that work with the cannabis industry from being charged with money laundering and other financial crimes, and requires the Financial Institution Examination Council to develop guidance to help credit unions and banks understand how to lawfully serve cannabis businesses,” the NCIA added.
Representatives Ed Perlmutter, D-Colorado; Denny Heck, D-Washington; Steve Stivers, R-Ohio; and Warren Davidson, R-Ohio, originally introduced the bill, which garnered over 200 cosponsors prior to the vote Wednesday.
Perlmutter announced the bill’s House passage Wednesday on Twitter: “This is a huge milestone in reforming federal cannabis laws and reducing the public safety risk in communities across the country.”
Sens. Cory Gardner, R-Colorado, and Jeff Merkley, D-Oregon, introduced the Senate version of the bill in April, and the Senate Banking Committee held a hearing on the issue in July. Committee Chairman Mike Crapo, R-Idaho, recently announced that cannabis banking legislation is being seriously considered in that chamber.
The author of a California bill that would create a separate category for banks and credit unions to handle cannabis cash earlier this month shelved the bill until next year. State Senate Majority Leader Bob Hertzberg, D-Van Nuys, said the legislation needs work on the details before it can go forward.