A slimmed-down coronavirus relief bill that House Democrats released on Monday again includes marijuana banking protections.
Despite pushback from GOP lawmakers who challenged the germaneness of including the cannabis language in a prior version that the House approved in May, the text of the Secure and Fair Enforcement (SAFE) Banking Act was again inserted into the new legislation. It could get a floor vote as early as this week—and that would mark the third time the chamber has taken up the banking measure in some form in the past year.
The SAFE Banking Act would protect financial institutions that service state-legal marijuana businesses from being penalized by federal regulators, and on its own has significant bipartisan support. But its inclusion in the COVID-19 relief legislation was widely criticized by Republicans who insisted that it was part of an expansive Democratic wishlist of items not related to the health crisis.
Senate Majority Leader Mitch McConnell (R-KY) has been particularly critical of the House proposal, specifically taking issue with industry diversity reporting provisions of the SAFE Banking Act, for example. Other vocal opponents include Vice President Mike Pence and Sens. James Lankford (R-OK) and John Kennedy (R-LA).
The Senate did not add cannabis banking language to its own version of COVID relief legislation filed in July.
“We appreciate that Democratic leadership is standing firmly behind the bipartisan SAFE Banking Act, despite some Republicans in Congress preferring to treat this public safety issue like some kind of comic relief,” Steve Fox, president of VS Strategies, told Marijuana Moment. “Far from being non-germane, the pandemic has only underscored the importance of this legislation.”
“At a time when businesses all across the country are relying on electronic transactions to protect public health, cannabis businesses are being forced to exchange currency. This bill is timely and necessary,” he said.
A summary of the banking provision prepared by House leaders states that it would “allow cannabis-related legitimate businesses, that in many states have remained open during the COVID-19 pandemic as essential services, along with their service providers, to access banking services and products, as well as insurance.”
Notably, the document highlights the diversity reporting language that some Republicans have slammed, signaling that Democrats are not shying away from those components despite the criticism. It explains that the legislation “requires reports to Congress on access to financial services and barriers to marketplace entry for potential and existing minority-owned cannabis-related legitimate businesses.”
Advocates, stakeholders and lawmakers have argued that providing marijuana banking protections will mitigate the spread of the coronavirus by making it so cannabis businesses don’t have to rely on cash transactions. House Speaker Nancy Pelosi (D-CA) said she agrees that the measure is an appropriate component of the bill.
“The inclusion of the SAFE Banking Act in the HEROES 2.0 package is a positive development,” NORML Political Director Justin Strekal said. “In the majority of states that regulate the marijuana marketplace, cannabis businesses have been deemed essential during this pandemic.”
“Unfortunately, at the federal level, prohibition compounds the problems that this emerging industry faces,” he said. “Small cannabis businesses in particular are facing tough economic times and access to traditional financial tools will help ensure that they can weather this pandemic.”
While the incremental reform measure would help alleviate financial complications in the cannabis market, news that House Democrats opted to stick to their guns on the industry-focused marijuana banking legislation could frustrate advocates who were disappointed when the chamber’s leadership decided to postpone a planned vote on a comprehensive cannabis legalization and social equity bill earlier this month.
The banking provisions are generally considered industry friendly without addressing the systemic problems resulting from the war on drugs. In the past, some activists have made the case that lawmakers should’t approve the SAFE Banking Act until marijuana is descheduled and restorative justice policies are implemented.
The House was expected to hold a floor vote on the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act to federally legalize cannabis last week, but leaders announced they were delaying it after certain centrist Democrats expressed concern about the optics of advancing marijuana reform legislation without first passing additional COVID relief.
All that said, others do view the banking protections as a boon for social equity in that they would help minority-owned cannabis businesses that currently struggle to get access to capital and financial services.
“Without access to much needed capital to maintain throughout the crisis, it is possible that we could see an acceleration of the corporatization of the cannabis industry in a manner that is inconsistent with the values and desires of many within the cannabis space,” Strekal said. “Enactment of the SAFE Banking Act would ensure that small businesses could compete in this emerging marketplace.”
In July, bipartisan treasurers from 15 states and one territory sent a letter to congressional leadership, urging the inclusion of the SAFE Banking Act in any COVID-19 legislation that’s sent to the president’s desk. Following GOP attacks on the House proposal, a group of Democratic state treasurers renewed that call.
The House last year approved the standalone SAFE Banking Act. For months, the legislation has gone without action in the Senate Banking Committee, where negotiations have been ongoing.