Senate Democrats are shifting the narrative on cannabis banking reform with the introduction of the rebranded and updated SAFER Banking bill. Initially coined SAFE Banking, the Senate Banking Committee is set to thoroughly examine the SAFER Banking Act — or the Secure and Fair Enforcement Regulation Banking Act — on September 27, as confirmed to MJBizDaily by a bipartisan coalition of senators.
This move, coupled with the federal health officials’ recent recommendation to reclassify marijuana, signals a potential overhaul of federal drug regulations that would significantly favor the marijuana industry.
Key Players Support the Initiative
Senate leader from the Democratic party, C. Schumer, known for supporting financial overhauls, applauded the introduction of the latest legislation. Joining him, Senators J. Merkley of Oregon (D), S. Daines of Montana (R), K. Sinema of Arizona (I), and C. Lummis of Wyoming (R) conveyed that this legislation is vital for improving community safety and supporting smaller enterprises. This act allows authorized marijuana businesses to utilize standard banking services like loans and banking facilities.
Moreover, the legislation aims to prevent federal bank regulators from shuttering a bank or credit union account purely on “reputational risk,” as acknowledged by the senators.
What It Means for Marijuana Reform
The upcoming markup hearing symbolizes a critical juncture for marijuana legislation within Congress. Typically, a markup hearing precedes a full Senate floor vote. Historical attempts at banking reform have managed to sail through the House of Representatives but encountered obstacles in the Senate. Achieving Senate approval demands a total of sixty affirmative votes, factoring in the filibuster rules.
Senate committee chair Sen. Sherrod Brown, a Democrat from Ohio, had previously alluded to an imminent hearing. Furthermore, the same Senate committee discussed an earlier draft of SAFE Banking this past May.
Highlights from the SAFER Banking Act
The Senate Democrats’ online portal outlines some notable amendments in the bill. These encompass directives for:
- Uniform guidance development by federal banking regulators, inclusive of guidance on “legacy cannabis-related deposits.”
- Updating guidelines associated with hemp-centric businesses.
- Modifying the Financial Crimes Enforcement Network (FinCEN) guidelines within a half-year period.
Additionally, the bill discourages financial institutions from withholding banking services driven by “personal beliefs or political motivations.” However, it does not mandate these institutions to offer services to cannabis enterprises. Key provisions include protections for state-regulated cannabis business employees seeking federal residential mortgages. In a two-year timeframe, specific rules are expected to be established to facilitate banking access for Tribal communities and residents of “rural, low and moderate-income areas.”
Other notable endorsers of the bill include senators from various states such as Kevin Cramer (R-North Dakota) and Cory Booker (D-New Jersey).
Bill Faces Criticism
Despite its promising aspects, the bill is not without detractors. Sundie Seefried, the CEO of Safe Harbor Financial, opined that the SAFER Banking Act might not radically revolutionize the banking landscape for the cannabis sector. The Bank Secrecy Act, which mandates financial bodies to cooperate with federal units in tracking money laundering, still casts a shadow over the industry. The need for reporting large cash deposits and the monitoring of “suspicious activities” imposes substantial operational burdens on financial institutions.
However, as Brady Cobb, CEO of Florida’s Sunburn Cannabis, emphasizes, the imminent hearing underscores a pivotal juncture in marijuana legislation. With the potential backing of the Biden administration and evident bipartisan support, the horizon seems promising for both the cannabis sector and the overarching movement.