The House of Representatives passed a bill Wednesday that provides safe harbor to banks that work with legal marijuana businesses, removing a significant roadblock to growth in the budding cannabis industry.
Rep. Steny Hoyer, D-Md., announced last week that the chamber would vote on the Secure and Fair Enforcement Banking Act – known as the SAFE Banking Act – which is the less ambitious of two marijuana-related bills congressional leadership had been considering for months. It passed 321-103, with 91 Republicans voting for it and Alabama Rep. Terri Sewell the only Democrat voting against it.
The legislation faces an uncertain fate in the Senate, where Majority Leader Mitch McConnell has been reluctant to bring up marijuana-related bills.
"Thousands of employees, businesses and communities across this country have been forced to deal in piles of cash because of the conflict between state and federal law," Rep. Ed Perlmutter, D-Colo., a bill sponsor, said after the measure passed Wednesday. "After six years of working on this bill, the SAFE Banking Act will go a long way in getting cash off our streets and providing certainty so financial institutions can work with cannabis businesses and employees."
The SAFE Banking Act would allow cannabis businesses to access financial services that have long been difficult to find due to their gray-area status — often legal in their individual state but illegal federally. Even cannabis businesses like hemp growers and CBD manufacturers that don't work directly with THC, the intoxicating chemical in marijuana, have struggled to access banking services due to trepidation that still hangs over the industry. Under the bill, marijuana businesses would be able to open accounts, take on loans, accept credit cards and deposit money into banks that now seldom associate with them for fear of repercussions from the federal government.
Those services will be important for a sector that added 64,389 jobs in 2018, according to a report by Leafly and Whitney Economics, and could grow even more as pot laws continue to loosen across the United States.
Scott Van Rixel, CEO of Bhang, a company that manufactures CBD candies and licenses THC products to state and provincial license holders, said giving cannabis companies access to general financial services would give the industry an air of stability and help it grow.
“Investors are going to have greater faith in the industry with access to traditional banking and the traditional credit card process,” he said. “Vendors and business to business are [also] going to be more comfortable if you know they can use standardized wires, standardized banking, write a check, get a wire without fear of reprisal or their bank account getting shut down.”
Safety is an issue, too. Many cannabis companies – like TILT Holdings, which raked in $39 million in earnings last quarter – are forced to do their business largely in cash, putting employees at risk of being robbed.
“It is imperative that we do everything possible to protect people working within the industry,” TILT Holdings Chief Operating Officer Tim Conder said.
But Kevin Sabet, who advised the Clinton, Bush and Obama administrations on drug policy, warns that SAFE Banking Act is a corporate giveaway in sheep’s clothing.
“It’s going to create another big tobacco and big pharma industry and it never ends well for public health,” he told Fox News. “Today’s marijuana is much more harmful than it used to be. It’s not Woodstock weed anymore.”
Sabet noted that Altria and Phillip Morris, two of the largest tobacco companies in the world, are invested in marijuana. So are many big alcohol companies.
“This isn’t about social justice at all, this is about enriching for-profit companies,” he said.
Some progressive Democrats say simply letting marijuana businesses work with banks isn’t enough.
The most comprehensive cannabis bill in Congress right now is the Marijuana Opportunity Reinvestment and Expungement Act, known as the MORE Act, which has support from Sen. Kamala Harris, D-Calif., and Rep. Jerrold Nadler, R-N.Y., among others. The bill, which would remove marijuana from the Controlled Substances Act and implement social justice programs for those affected by the ‘War on Drugs,’ would likely have a more difficult time clearing the Senate and getting President Donald Trump’s signature than the SAFE Banking Act.
Legal-pot activists and progressives had beseeched House members to take up the MORE Act first, worrying Congress would stop with the SAFE Banking Act. In a move to potentially assuage those fears and round up votes for Wednesday, Nadler committed to a markup of the MORE Act Tuesday night.
"The House is expected to consider the SAFE Banking Act on the floor tomorrow and I will vote for it," he said in a statement. "As the sponsor of the MORE Act, I also strongly support additional marijuana reform...."
Sabet is skeptical about the MORE Act, too.
“This is not going to be an industry that produces social justice. It’s going to be an industry that perpetuates social injustice, as it already is,” he said.