Activists from the DC Marijuana Justice (DCJM) wave flags during a rally to demand Congress to pass cannabis reform laws on the East Lawn of the US Capitol in Washington, DC on October 8, 2019
Olivier Douliery | AFP | Getty Images
A recent bill that goals to provide the marijuana industry access to banking services moved forward within the Senate on Wednesday.
The Secure and Fair Enforcement Regulation Banking Act was introduced by a bipartisan group of senators last week. The bill would offer legal protection to banks or other financial institutions that supply services to state-legal marijuana businesses.
The Senate Banking Committee voted 14-9 to advance the measure to the total chamber’s floor.
Sen. Jeff Merkley, an Oregon Democrat and lead sponsor of the bill, called its passage a “historic moment” and an “example of great bipartisan cooperation.”
“Forcing legal businesses to operate in all-cash is dangerous for our communities; it’s an open invitation to robberies, muggings, money laundering, and arranged crime—and the one people benefiting from the present system are criminals,” said Merkley in statement.
“I’m committed to constructing bipartisan momentum to finally get a bill signed into law that ends the cannabis money economy and improves public safety across the nation,” he added.
The bill can be being led by Steve Daines, R-Mont.; Kyrsten Sinema, I-Ariz.; and Cynthia Lummis, R-Wyo., in addition to Majority Leader Chuck Schumer, D-N.Y.
Senator Jeff Merkley, a Democrat from Oregon, speaks during a news conference on the U.S. Capitol in Washington, D.C., on Jan. 25, 2020.
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“This laws will help make our communities and small businesses safer by giving legal cannabis businesses access to traditional financial institutions, including bank accounts and small business loans,” the senators said in a joint statement last week.
“It also prevents federal bank regulators from ordering a bank or credit union to shut an account based on reputational risk,” they added.
Whilst 39 states have legalized marijuana for recreational or medical use, the sector has struggled to scale. Marijuana’s classification as a Schedule I substance, or one with no currently accepted medical use and a high potential for abuse, together with federal prohibition, pose a risk to banking institutions. This, in turn, has limited access to financing and a broader market.
Furthermore, without access to financial services, state-legal cannabis businesses are forced to operate their businesses solely using money, which can lead to robbery, money laundering and arranged crime.
As a result of the opening of recent adult-use markets in individual states, combined U.S. medical and recreational cannabis sales are expected to achieve $33.6 billion by the tip of 2023, according to evaluation from the MJBiz Factbook from industry news outlet MJBizDaily.
The landmark vote Wednesday marked the primary time the Senate has considered the laws. An earlier version of the bill, the SAFE Banking Act, passed within the House seven times previously but has never advanced through the Senate under each Democratic and Republican control. Late last yr, lawmakers excluded it from a $1.7 trillion government funding bill.
The bill may face a tougher path to passage if it finally ends up before the GOP-controlled House.
“I feel it probably passes the banking committee, but I feel it doesn’t go anywhere within the House,” said Ian Katz, an analyst with Capital Alpha Partners who covers banking and financials.
“Republicans appear to be souring on it,” he added.
The brand new bill includes stricter requirements for federal regulators, comparable to prohibiting them from terminating any marijuana-related accounts without “valid reason,” or from denying banking services based on “personal beliefs or political motivations.”