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Proponents Hope Pot Banking Can Hitch Ride on Defense Bill

Posted on Nov. 30, 2021

Supporters of marijuana banking reform legislation are urging lawmakers to include those reforms in the fiscal 2022 National Defense Authorization Act (NDAA), but the Senate is struggling to get its version of the bill across the finish line.

In a 45-51 procedural vote, the Senate on November 29 failed to begin debate on its substitute amendment to the House-passed NDAA (H.R. 4350), which doesn’t include the banking provisions.

Five Senate Democrats joined the majority of Republicans in voting against the procedural motion, but Majority Leader Charles E. Schumer, D-N.Y., blamed Republicans for blocking the bill despite what he called a “fair process” for allowing ample debate and amendments from both parties. Schumer entered a motion to reconsider the failed vote at a later date.

The House passed H.R. 4350 in September, after approving the Secure and Fair Enforcement (SAFE) Banking Act of 2021 (H.R. 1996) as an amendment. The SAFE Banking Act would allow access to banking services for cannabis businesses operating in states where marijuana sales are legal by exempting financial institutions from federal investigation or prosecution for providing those services.

Many cannabis businesses are unbanked, operating on a cash-only basis and paying federal and state taxes in cash and only at designated offices where the tax authorities can accept it — roadblocks that most other legal businesses don’t face. Proponents argue that increased access to banks would lead to less reliance on cash, improving public safety and increasing tax compliance for those businesses.

The September vote marked the fifth time the SAFE Banking Act has passed the House in some form over the past two Congresses. Now supporters of the bill want to see the Senate follow suit.

A bipartisan group of Senate Armed Services Committee members, led by Sen. Jacky Rosen, D-Nev., sent a November 23 letter to the leaders of the House and Senate Armed Services committees requesting that a final conference agreement include the SAFE Banking Act provisions. The letter echoes prior arguments casting it as a public safety bill.

“Allowing cannabis businesses operating legally and in compliance with state law to access financial services without federal reprisal would address public safety and compliance challenges, helping communities reduce cash-motivated crimes,” says the letter, which was also signed by Sens. Gary C. Peters, D-Mich.; Angus S. King Jr., I-Maine; Kevin Cramer, R-N.D.; and Mark Edward Kelly, D-Ariz.

All those senators represent states where marijuana is either fully or partially legal. The two Democratic senators representing Colorado, where marijuana is fully legal, are also joining calls to ensure that the SAFE Banking Act is included in the final NDAA bill.

“Without federally-approved banking services, state-licensed cannabis businesses cannot write checks, make or receive electronic payments, utilize a payroll provider, or accept credit and debit cards. This is a serious public safety risk for our communities, inviting theft, tax evasion, robberies, burglaries, or worse,” Sens. John Wright Hickenlooper and Michael F. Bennet wrote in a November 24 letter to leaders of the Senate Armed Services and Banking, Housing, and Urban Development committees.

Hickenlooper and Bennet argued that marijuana legalization has had a “profound impact” on Colorado’s economy, leading to the creation of more than 35,000 jobs and bringing in over $1 billion in tax revenue.

The senators’ letters come after a bipartisan group of more than 20 state governors wrote a November 9 letter to Senate and House leaders urging them to include the SAFE Banking Act in the NDAA.

All the letters have argued for including the SAFE Banking Act in a conference agreement between the House and Senate, perhaps recognizing that any effort to attach the provisions to the NDAA in the Senate is a long shot. Senate Democratic leaders have indicated that they won’t support passage of the banking bill without linking it to broader marijuana decriminalization efforts.

The lead sponsor of the SAFE Banking Act in the House, Rep. Ed Perlmutter, D-Colo., recently took to Twitter to make the case for including his bill in the NDAA.

“Including #SAFEBanking in the final NDAA will help safeguard our financial system, reduce the public safety risk & help support Veteran & minority-owned businesses now. It will help pave the way for broader, comprehensive cannabis reform & create a safer, more equitable industry,” Perlmutter wrote in a November 24 tweet.

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