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(This is a developing story and will be updated.)
The latest push for federal cannabis banking reform in the United States passed a markup hearing in the Senate Banking Committee on Wednesday, demonstrating bipartisan support for allowing state-legal marijuana businesses to access financial services and setting up the bill for a full vote in the chamber.
The outcome of Wednesday’s Senate Banking Committee hearing improves the prospects that regular financial institutions can serve state-legal cannabis businesses despite federal marijuana prohibition, reducing the MJ industry’s inconvenient and dangerous dependence on doing business in cash.
The 23-member committee voted 14-9 in favor of sending the bill to the Senate floor with technical amendments.
It’s the first time the banking legislation – rebranded as the SAFER (Secure and Fair Enforcement Regulation) Banking Act – has garnered a yes vote in the Senate.
“This bipartisan legislation represents an improved version of the SAFE Banking Act,” NORML Political Director Morgan Fox said in a statement.
“It allows state-licensed cannabis businesses to more easily access financial services, such as opening a simple bank account, and it provides entrepreneurs with greater access to lending and other services that are available to other legal businesses.”
However, the legislation is still far from becoming law.
Next, the SAFER Banking Act faces a possible federal government shutdown on Oct. 1 amid a political battle between the Democrat-controlled Senate and the Republican-controlled House of Representatives.
That potential shutdown would pose risks for SAFER Banking as it winds its way through Congress, burning time that legislators could otherwise use to pass legislation.
Regardless of the political unknowns, Wednesday’s committee vote is likely to be seen as positive news for the regulated cannabis industry.
Next steps for SAFER
The SAFER Banking Act is a revived and revised version of several previous cannabis banking reform bills to make it through the House but not the Senate.
Before amendments introduced Wednesday, the version put before the Senate Banking Committee would offer “safe harbor” for financial institutions such as banks and credit unions that transact with state-legal marijuana businesses.
However, those federally supervised institutions must still operate “in a safe and sound manner” and “have processes and procedures in place to identify fraudulent or illegal activity.”
Other provisions in the bill would:
- Prevent federal regulators from making banks close the accounts of state-legal marijuana businesses without a “valid reason.”
- Require the creation of “uniform guidance and examination procedures for depository institutions that provide financial services to state-sanctioned marijuana businesses.”
- Require new guidance “regarding providing financial services to hemp-related legitimate businesses and hemp-related service providers.”
Critics of SAFER have faulted the bill for maintaining Bank Secrecy Act requirements that require banks to monitor transactions for suspicious activity and file reports.
Impact of looming shutdown
If a government shutdown does occur, it’s anybody’s guess as to how long that shutdown might derail further progress on SAFER by lawmakers.
Leaving the shutdown risk aside, senators could now try to further amend the bill on the Senate floor before a vote, cannabis equity analyst Pablo Zuanic of New York-based Zuanic & Associates observed in a research note to clients last week.
If the bill does muster the 60 votes required to pass the Senate, Zuanic wrote, its journey through the House could involve “a prolonged process through mid-2024” or a more rapid passage “if it is included in a must-pass bill by year-end.”
Previous versions of the bill, formerly called the SAFE Banking Act, passed the House seven times, albeit when that chamber was controlled by Democrats.
However, Zuanic warned that the now Republican-controlled House has “other priorities.”
Solomon Israel can be reached at solomon.israel@mjbizdaily.com.
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