Dive Brief:
- The House of Representatives on Wednesday passed the Secure and Fair Enforcement (SAFE) Banking Act, a landmark bill that creates protections for financial institutions that provide services to cannabis-related businesses.
- The Democrat-controlled chamber passed the bill in a 321-103 vote, with the support of 229 Democrats and 91 Republicans. One independent voted for the bill, while 102 Republicans and one Democrat voted against.
- The bill now moves to the GOP-controlled Senate, where it faces the challenge of winning over Republican lawmakers who have historically refrained from voting in favor of cannabis legislation.
Dive Insight:
The passage of the SAFE Banking Act would be a major win for the cannabis industry and banks that want a piece of the emerging market's growing deposits. Data firm Nielsen said it expects the U.S.'s legal cannabis market to reach $41 billion by 2025.
The bill seeks to clarify protections for banks that want to open accounts for pot-related businesses in states where the drug is legal.
Marijuana is a Schedule 1 drug under federal law, prompting many financial institutions to stay out of the sector.
American Bankers Association President and CEO Rob Nichols called the vote a "significant step forward for public safety, transparency and common sense."
"By helping to provide clarity for the financial sector in those states where cannabis is legal, this bill will help banks meet the needs of their communities while reducing cash-motivated crimes, increasing the efficiency of tax collections and improving the cannabis industry's financial accountability," the trade group leader said in a statement.
Many advocates for cannabis banking say the legislation addresses a safety issue, as most marijuana-related businesses are cash-only and have become victims of theft.
Wednesday's House vote also garnered the support of the Independent Community Bankers of America (ICBA) which says the cannabis-banking issue is a high priority for the trade group.
"The conflict between state and federal law on cannabis-related businesses has created significant legal and compliance concerns for financial institutions that could provide needed banking services to these companies," ICBA President and CEO Rebeca Romero Rainey said in a statement.
The bill now heads to the Senate, and several updates that were added last week could give it the boost it needs to win over Republicans.
One revision clarifies that the bill also applies to manufacturers of hemp and cannabidiol businesses, which could curry favor with Senate Majority Leader Mitch McConnell, R-KY, who has been a strong supporter of the hemp industry.
Additional language appears to address "Operation Choke Point," the Justice Department's controversial initiative that investigated banks' ties to firearms dealers and payday lenders, industries believed to be linked to money laundering. The DOJ operation lasted from 2013 to 2017.
Republicans who criticized the Obama-era initiative will likely approve of the bill's updated section that would prevent the program's return.
It's not clear when the Senate will vote on the SAFE Banking Act, but Senate Banking Committee Chairman Mike Crapo, R-ID, said he plans to hold a vote on cannabis banking legislation by the end of the year.
