House-passed NDAA includes banking provisions for cannabis

Dive Brief:

Two banking-related bills, including legislation that would protect banks that service legal cannabis businesses, and another that would allow individuals with a conviction history to work in the financial sector, were included in the House version of the defense spending bill that was passed Thursday.
The Secure and Fair Enforcement (SAFE) Banking Act’s inclusion in the House’s 2023 National Defense Authorization Act (NDAA) marks the seventh time the legislation has passed in the House, both as a stand-alone bill and as text attached to larger legislation.
Lawmakers also used the NDAA as a vehicle for the Fair Hiring in Banking Act, a measure that would loosen restrictions for ex-offenders seeking employment at banks.

Dive Insight:

SAFE Banking has been attached to the NDAA before, only to be stripped from the final version of the 2022 defense spending legislation.

The bill has also been included and nixed from two COVID-19 relief bills, as well as the America COMPETES Act.

Rep. Ed Perlmutter, D-CO, who has introduced SAFE Banking every legislative session since 2013, urged the Senate to finally push the bill through.

“I’m calling on the Senate to take action for the safety of our communities and success of Veteran- and minority-owned businesses across the country,” tweeted Perlmutter, who is not seeking re-election this year. “It’s time to get this done.”

While the bill has a history of gaining traction in the House, the Senate has emerged as a roadblock to SAFE Banking over the past year, as Senate Democrats have signaled a desire to pass more comprehensive cannabis reform over the industry focused banking bill.

Key lawmakers in the Senate have turned their focus to the Cannabis Administration and Opportunity Act (CAOA), draft legislation that would remove cannabis from the federal list of controlled substances and expunge federal nonviolent pot-related crimes.

“The banking bill only deals with a small part of [issues related to cannabis], but not what needs to be done. We need a broad comprehensive bill,” Schumer said when he introduced the draft bill last year.

United front

Bank and credit union trade groups, which have been some of the bill’s strongest backers, threw their support behind the bill’s inclusion in the NDAA in a joint letter Wednesday.

In a letter sent to House leaders Friday, the American Bankers Association (ABA), the Credit Union National Association (CUNA), the Independent Community Bankers of America (ICBA) and the National Association of Federally-Insured Credit Unions (NAFCU), said their support of SAFE Banking is largely due to the safety issues surrounding the cash-heavy nature of the cannabis industry.

In recent years, SAFE Banking has emerged as a unifying issue for credit unions and banks, which have found themselves at odds with one another over merger- and tax-related issues.

“[F]inancial institutions operating in states where it is legal have business and individuals involved in the cannabis market who need access to traditional depository and lending services, the absence of which creates a significant public safety issue,” the groups wrote Friday.

The groups said SAFE Banking would also protect financial institutions that may unknowingly serve cannabis businesses in states where the drug is legal.

“Indirect connections are often difficult to identify and avoid because, like any other industry, those offering cannabis-related services work with vendors and suppliers,” the groups wrote. “Under current law, a financial institution that does business with any one of these indirectly affiliated entities could unknowingly violate federal law.”

Fair hiring

In addition to SAFE Banking, the Fair Hiring in Banking Act, another banking-related bill, found its way into the House-passed NDAA.

Under the bill, which was introduced in the House last year and passed as stand-alone legislation in May, a bank would not need prior written consent from the Federal Deposit Insurance Corp. (FDIC) to hire an individual convicted of a criminal offense under the following conditions: