Senate Banking Committee Approves Marijuana Banking Bill

The Senate Banking Committee on Wednesday approved legislation that would provide credit unions and banks with a regulatory safe harbor if they provide financial services to marijuana-related businesses.

It marks the first time that a Senate committee has considered marijuana banking legislation. The measure now goes to the Senate floor.

The bill, S. 2860, was approved 14-9.

Credit union trade groups immediately applauded the committee’s action.

Bill’s History

The House has passed such legislation when the body was controlled by the Democrats. It is unclear if or when the Republican-controlled House will consider it. The House and Senate have been deadlocked over government funding for FY24 and it is uncertain when other legislation may be considered. Since this is the first year of the 118^th Congress, the bill still could be considered next year.

Bringing the bill to the committee “has been quite a journey,” Banking Committee Chairman Sherrod Brown, D-Ohio, said, as he opened the markup. He said banking issues are only one part of a larger debate over federal drug policy.

Attracting GOP Support

And in ruling that two amendments were not in order, Brown made the point that the Banking Committee has only limited jurisdiction over drug policy.

In addition to providing credit and unions a regulatory safe harbor, the bill also contains unrelated provisions designed to attract Republican support.

Those provisions would require that financial institutions not discriminate against groups or people based on political or personal beliefs. That language was intended to guarantee that the federal government does not adopt a program such as “Operation Choke Point,” an Obama Administration program that many Republicans said was intended to make it easier for financial institutions to decide not to provide services to firearms companies.

However, committee member Sen. Mike Crapo, R-Id., said those provisions do not go far enough. He said the bill contains holes that financial institutions could “drive any kind of truck through.”

Amendments Debated

He offered an amendment that would have prohibited financial regulators from pressuring a credit union or bank to close a bank account unless the account poses a safety or soundness risk, or the account owner presents a clear danger to the institution.

Sen. Jack Reed, D-R.I., said that the amendment would limit the ability of a regulator to anticipate dangers before they occur.

The amendment was defeated, 8-15.

The committee also defeated an amendment offered by Sen. Raphael Warnock, D-Ga., which would have ended the regulatory protection of credit unions and banks if the federal government cannot demonstrate how it has helped communities that have been harmed by the War on Drugs.

“This bill would make life safer for banks, financial institutions and businesses,” he said. At the same time, millions of people are incarcerated for non-violent drug offenses, Warnock said.

Brown opposed the amendment, saying that the five-year sunset would bring uncertainty for financial institutions.

Sen. Chris Van Hollen, D-Md., said that Senate Minority Leader Charles Schumer, D-N.Y., has made a commitment that the Senate will consider legislation to help people who have been convicted of non-violent drug offenses and to assist communities ravaged by the War on Drugs.

Warnock’s amendment was defeated, 3-20.

Sen. Bill Hagerty, R-Tenn., attempted to offer an amendment that would crack down on businesses he said laundered funds from illegal fentanyl sales through marijuana businesses.

Brown ruled the amendment was outside the Banking Committee’s jurisdiction and did not allow it to be presented.

The committee upheld his ruling, 30-10.

Credit Unions Praise Bill

Credit union trade groups had criticized the provisions in the bill they said expanded regulators’ powers to decide who financial institutions could serve.

However, following the committee’s approval of the bill, the trade groups thanked the panel for approving the marijuana provisions.

“This bill will allow credit unions to lawfully serve these businesses and addresses the serious public safety issue of forcing these businesses to deal in only cash,” CUNA Deputy Chief Advocacy Officer for Federal Government Affairs Jason Stverak, said.

NAFCU Senior Vice President of Government Affairs Greg Mesack also said his trade group was pleased with the committee’s approval of the bill.

“This legislation is necessary to protect credit unions and the communities they serve in states where legal cannabis businesses are seeking financial services,” he said. “It will help reduce risks by providing some legal clarity and expanding access to deposit accounts and other financial products.”

And signaling that the trade group has not abandoned efforts to amend the bill, Mesack added, “NAFCU looks forward to continuing the conversation as the bill moves forward to a full body vote.”

Republican Opposition

However, four Republican senators vowed to fight the bill when it reaches the Senate floor.

“The significant mental health damage to youth caused by these products will only worsen with the passage of the SAFER Banking Act, as the industry will use new investments to increase potency further and bring in new users, including children,” Republican Sens. Pete Ricketts of Nebraska, John Cornyn of Texas, Ted Budd of North Carolina and James Lankford of Oklahoma, wrote in a letter to Senate leaders.

They added, “This legislation also compromises the integrity of the United States banking system by giving banks government approval to participate in illegal activity, setting a dangerous new precedent. Allowing banking access to a Schedule I drug sets a dangerous legal precedent and will help facilitate money laundering for drug cartels.”