An amendment to the House defense authorization bill that would connect cannabis companies to the banking system has bipartisan support in both chambers, but its chances in the Senate are uncertain.
Late on Tuesday evening, the House agreed by voice vote to adopt an amendment offered by Rep. Ed Perlmutter, D-Colo., that would bar federal banking regulators from taking action against banks that serve cannabis businesses operating legally under state law. The amendment attaches provisions of Perlmutter’s cannabis banking bill to the fiscal 2022 defense authorization bill.
“I’ve been talking for years about the serious public safety threat that exists in our communities. The SAFE Banking Act will strengthen the security of our financial system and keep bad actors like cartels out of the cannabis industry,” Perlmutter said in a statement, using the acronym for the bill’s title. He added that he will work with colleagues in the Senate to ensure that provisions make it into the final bill.
Supporters of such legislation say shutting legal cannabis businesses out of the banking system forces them into cash transactions that involve greater risks, including for theft and money laundering.
Senators on Wednesday said they were unsure of how the provisions would fare in the chamber or whether they would make it through conference, the process by which the House and Senate negotiate differences in legislation before final passage.
Sen. Jack Reed, D-R.I., chairman of the Armed Services Committee, said the cannabis banking amendment has not been part of discussions on the Senate legislation. The text of the Senate bill became available Wednesday.
“It’s not come up in the context of our bill, so I’ve had no input or discussions about it. It will be part of the conference if it’s on the House bill,” Reed said, adding that he does not know what will happen in conference.
Sens. Brian Schatz, D-Hawaii, and Rand Paul, R-Ky., both co-sponsors of the Senate version of the banking bill introduced by Oregon Democrat Jeff Merkley, said they support the provision but aren’t sure whether it will end up in the Senate defense authorization bill or make it through conference.
Senate Banking Chairman Sherrod Brown, D-Ohio, wants any change to cannabis banking laws to include a component providing "restorative justice" for people and communities most affected by the criminalization of marijuana and the mass incarceration of nonviolent offenders, according to his office. The senator would work to achieve those goals, his office said.
Schatz pointed to opposition from Minority Leader Mitch McConnell as a potential challenge.
“We’ve had increasing bipartisan support year-over-year, but Mitch McConnell doesn’t like it. So he’s going to have to consult with the Republicans in his conference who are in favor of this reform, but so far he’s been blocking it,’ Schatz said in an interview.
McConnell’s office did not respond to a request for comment about the senator’s reaction to the amendment or his stance on cannabis banking reform more broadly.
McConnell shepherded the legalization of hemp through the Senate in the 2018 farm bill. The product derives from the same plant as marijuana. However, an earlier version of Perlmutter’s bill passed the House in September 2019 but did not get a vote in the Senate, where McConnell was majority leader at the time.
NDAA improves Senate odds
Still, the measure has bipartisan support among senators. Some supporters, including Sen. Cynthia Lummis, R-Wyo., are optimistic about its chances. Lummis is one of nine Republican co-sponsors of the Senate version of Perlmutter’s bill.
“The NDAA is always must-pass legislation, so I think the chances of that amendment staying on the bill are pretty good,” Lummis said. “There is bipartisan support, as you know, for that act, so banks can make decisions based on creditworthiness and financial soundness, as opposed to the underlying policy.”
James Ballentine, executive vice president of congressional relations and political affairs at the American Bankers Association, pointed to the “overwhelming, bipartisan support” in the House as a positive sign.
“Lawmakers clearly understand the immediate public safety benefits that would come with ending the conflict between federal and state law in those states where cannabis is legal,” Ballentine said in a statement. “We think the strong vote bodes well for final action in the Congress later this year.”