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Senate Democrats have released an updated and rebranded cannabis banking reform bill ahead of a long-awaited committee markup and expected vote scheduled for next Wednesday.
Instead of SAFE Banking, the Senate Banking Committee on Sept. 27 will pore over a bill called SAFER Banking, a bipartisan group of senators confirmed to MJBizDaily on Wednesday.
SAFER Banking is short for Secure and Fair Enforcement Regulation Banking Act.
Together, the updated banking bill – and the Aug. 29 recommendation by federal health officials that marijuana be reclassified – boost the odds for a major marijuana industry-friendly overhaul of federal drug laws.
Politico first reported the new bill language late Tuesday.
Democratic Senate Majority Leader Chuck Schumer, who has made banking reform a priority, hailed the introduction of the SAFER Banking bill.
“This legislation will help make our communities and small businesses safer by giving legal cannabis businesses access to traditional financial institutions, including bank accounts and small business loans,” the New York Democrat said in a statement with four other senators.
He was joined in the statement by Sens. Jeff Merkley, D-Oregon; Steve Daines, R-Montana; Kyrsten Sinema, I-Arizona; and Cynthia Lummis, R-Wyoming.
“It also prevents federal bank regulators from ordering a bank or credit union to close an account based on reputational risk,” the senators added.
“We look forward to the markup of this bill in the Senate Committee on Banking, Housing and Urban Affairs on September 27.”
Important step
The markup hearing would represent a major milestone for marijuana reform in Congress.
A markup hearing – which often includes a vote on the legislation by the panel – is the traditional precursor to a full Senate floor vote.
In the past, banking reform has repeatedly passed the House of Representatives only to stall out in the Senate.
Sixty votes are needed to pass bills in the Senate under filibuster rules.
Earlier this month, committee chair Sen. Sherrod Brown, an Ohio Democrat, promised a hearing would happen soon.
The same Senate committee held an informational hearing on an earlier version of SAFE Banking in May.
According to a summary posted on Senate Democrats’ website, major changes include requirements for:
- Federal banking regulators to “develop uniform guidance and examination procedures – including legacy cannabis-related deposits.”
- Federal banking regulators to also “update guidance related to hemp-related businesses and service providers.”
- The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) to amend previous guidance within six months and for “depository institutions” to comply with FinCEN rules.
The new language also discourages banks and credit unions from denying banking services based on “personal beliefs or political motivations,” though financial institutions will not be required to offer services to cannabis businesses.
It does forbid regulators from ordering banks to cancel an account “unless there is a valid reason.”
There are also new protections for employees of “state-sanctioned cannabis businesses” seeking federally funded residential mortgages.
In addition, cabinet-level agencies must, within two years, “promulgate tailored rules or guidance” to ease access to banking services for members of Tribal communities as well as “those in rural, low and moderate-income areas.”
Other cosponsors include Sen. Kevin Cramer, R-North Dakota, Sen. Cory Booker, D-New Jersey, Sen. Dan Sullivan, R-Arkansas, and Sen. Bob Menendez, D-New Jersey.
Legislation has critics
The language still isn’t perfect, according to Sundie Seefried, CEO of Colorado-based Safe Harbor Financial, which offers banking services to marijuana industry businesses.
“SAFER Banking Act will not flood the cannabis industry with banking options as the primary roadblock remains Bank Secrecy regulations,” Seefried said in a statement Wednesday.
Under the Bank Secrecy Act, financial institutions are required to assist federal agencies in detecting money laundering.
That means bankers must still report cash deposits in excess of $10,000 and make “suspicious activity reports” that could flag otherwise normal transactions for further scrutiny – both of which “require substantial resources,” Seefried said.
“Unless Bank Secrecy regulations are substantially changed, the fact remains that the cannabis industry is both cash intensive and, at the same time, continuing to fight an active, illicit market operating in plain sight,” Seefried added.
But even with these caveats, passage of banking reform seems closer than ever – and, coupled with the Biden administration’s push to reschedule marijuana, so does systemic MJ policy reform.
The hearing “signals that the political winds have changed and the will of leadership is to advance the long overdue legislation,” said Brady Cobb, the founder and CEO of Florida-based Sunburn Cannabis.
“If passed from the committee, it also appears as if there is sufficient bipartisan support to pass it on the Senate floor,” Cobb said.
“As someone who has lobbied for this bill for close to 10 years and favored a path of incremental policy wins, I cannot underscore how significant this moment is for the movement and the industry as a whole.”
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
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