Banking groups lobby Congress to enable banking services for cannabis companies
Trade groups believe it’s high time to push for legislation that would make life easier for the budding cannabis industry.
The SAFE Banking Act, which would enable banks and credit unions to do business with cannabis-related businesses in states where marijuana is legal, is poised to pass the House after overwhelmingly advancing through the House Financial Services Committee and being waived through the House Judiciary Committee.
Naturally, groups representing the cannabis industry are pushing for the bill, which they say would help grow the industry in the U.S. and make it significantly safer. Members of the National Cannabis Industry Association descended on Capitol Hill in late May for an annual lobbying blitz. The trade group ramped up its lobbying spending to an all-time high of $560,000 last year.
Overall, the industry reported spending a record $2.7 million on lobbying in 2018. It’s on pace to surpass that number this year, shelling out more than $900,000 through the first quarter.
But pro-cannabis groups aren’t the only ones pushing for the bill. The country’s largest banking associations are also lobbying in support of the SAFE Banking Act, joining an even 50 organizations lobbying on the measure.
A longstanding lobbying powerhouse, the American Bankers Association, is supporting the bill, stating it provides “much needed clarity for banks in states where cannabis is legal.” The group has already spent more than $2.4 million on lobbying through the first quarter of 2019, deploying 65 lobbyists and 37 members of the revolving door club.
Most financial institutions avoid the cannabis industry due to the risk of prosecution from the federal government, which considers cannabis a Schedule 1 drug. Thus, most cannabis companies use cash for all transactions, which has led to a number of robberies in pot-legal states.
The Credit Union National Association, which regularly spends upwards of $4 million on lobbying each year, also lobbied on the bill and testified in support of the measure, arguing that financial institutions can safely provide services for cannabis companies.
“In terms of safety, statistics show that cash-only businesses increase the risk of crime,” Oregon-based Maps Credit Union executive Rachel Pross told the House Financial Services Committee. “This is especially true in the cannabis sector given the lack of access to basic financial services.”
Another major trade group with longstanding influence in Washington, D.C., Independent Community Bankers of America, is also pushing for the measure. On behalf of the trade association, Gregory Deckard, chairman and CEO of Washington-based State Bank Northwest, testified that state-backed banks created specifically to serve the cannabis industry would not be feasible, citing a 2018 California study.
Few major banks have publicly thrown support behind the bill, though financial services behemoths Wells Fargo and Citigroup lobbied lawmakers over provisions in the bill in the first quarter of 2019. It’s clear some members of the banking industry see potential in legalized marijuana, as Citigroup has reportedly begun to reconsider its role in cannabis-related banking.
The House version of the SAFE Banking Act has a whopping 206 co-sponsors, including 180 Democrats and 26 Republicans.
Republican opposition to marijuana has mellowed in recent years. Former House Speaker John Boehner (R-Ohio), formerly a staunch critic of marijuana legalization, now sits on the board of Acreage Holdings and stands to make millions off of his stake in the marijuana company. Acreage Holdings lobbied in support of the SAFE Act in the first quarter of 2019, arguing that current federal law “results in a lost opportunity for the US economy.”
Sen. Cory Gardner (R-Colo.), a Republican representing the first state to legalize recreational marijuana along with Washington, has pushed several cannabis-friendly bills but has unsuccessfully sought to get Senate Republican leadership to endorse his legislation. He introduced the SAFE Banking Act in the Senate alongside Sen. Jeff Merkley (D-Ore.). Gardner joins Alaska senators Lisa Murkowski and Dan Sullivan, along with Kentucky’s Rand Paul and North Dakota’s Kevin Cramer, as the five Republican co-sponsors. In Alaska, which legalized marijuana in 2014, a major credit union recently began offering financial services to cannabis companies.
The trade groups pushing the bill are major Republican donors — affiliates of the American Bankers Association contributed $2.2 million to Republican congressional candidates in 2018 — but their support may not be enough to influence Republican leadership.
Senate Banking Chair Mike Crapo (R-Idaho) has bluntly said he won’t commit to moving the legislation forward. The Republican-held Senate Appropriations Committee in 2018 blocked an amendment that would similarly allow financial institutions to do business with cannabis businesses. Senate Majority Leader Mitch McConnell has blocked similar legislation from Gardner, despite knowing that the Colorado senator faces a tough re-election in a pot-friendly state.
If the SAFE Banking Act falters, cannabis banking advocates have another option to fall back on. House Democrats plan to include similar protections in their proposed annual spending bill.
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