A bipartisan duo of Colorado and Ohio attorneys general recently sent a letter to U.S. Senate leadership, imploring the passage of a bipartisan bill to protect banks that work with state-legal marijuana businesses.
The Senate has faced significant pressure to approve the Secure and Fair Enforcement (SAFE) Banking Act, which has cleared the House in some form in six times at this point.
Now Colorado Attorney General Philip Weiser (D) and Ohio Attorney General Dave Yost (R) are again adding their voices to the chorus, sending a letter to leaders of the Senate that underscores the urgent need to provide a federal fix to the banking issue for the cannabis industry.
The law prohibits banks from providing services to cannabis businesses in states where medical or retail sales are legal. Cash-only operations pose safety threats. Again we ask the US Senate to pass the #SAFEBankingAct to give this industry access to the federal banking system. pic.twitter.com/E0RnOoiI8i
— Colorado Attorney General (@COAttnyGeneral) April 21, 2022
The top state prosecutors, who serve as co-chairs of the National Association of Attorneys General (NAAG) Federalism Committee, said in the letter last week that “states and federal government share a strong and common interest in protecting public safety and bringing grey market financial activities into the regulated banking sector.”
“To address these vital goals, we yet again urge the Senate to bring the SAFE Banking Act to the Senate floor for a vote as soon as possible,” they wrote.
The legislation from Rep. Ed Perlmutter (D-CO) would prevent financial institutions from being penalized by federal regulators for servicing state-legal marijuana businesses. One path to enactment could be a separate, large-scale manufacturing bill that’s being negotiated by appointed conferees from both chambers before its sent to the president’s desk.
To that end, the third-highest-ranking Democrat in the Senate will be among the conferees pushing for the inclusion of SAFE Banking in the America COMPETES Act.
In the new letter, the attorneys general wrote that they “urge the Senate to advance the SAFE Banking Act or similar legislation to provide a safe harbor for depository institutions that provide a financial product or service to a covered business in a state that has implemented laws and regulations that ensure accountability in the marijuana industry.”
“An effective safe harbor would bring billions of dollars into the banking sector, enabling law enforcement; federal, state and local tax agencies; and cannabis regulators in 37 states and several territories to more effectively monitor cannabis businesses and their transactions. Furthermore, compliance with tax laws and other relevant requirements would be simpler and easier to enforce with the regulated tracking of funds in the banking system, resulting in higher tax revenues.”
Weiser and Yost separately sent a similar letter to congressional leadership on the banking issue around this time last year. They were joined by the attorneys general of North Dakota and Washington, D.C.
It was similar to a message that 34 top state prosecutors sent to congressional leadership in 2020.
“Our banking system must be flexible enough to address the needs of businesses in the various states, with state input, while protecting the interests of the federal government,” the latest letter says. “This includes a banking system for marijuana-related businesses that is both responsive and effective in meeting the demands of our economy.”
Meanwhile, Washington State officials also recently held a virtual roundtable to address the recent spate of deadly robberies targeting marijuana retailers, with regulators reiterating their call for a federal policy change and discussing steps the state can take on its own while Congress fails to act.
Part of the problem in getting the SAFE Banking Act passed through the Senate under Democratic control is the fact that Majority Leader Chuck Schumer (D-NY) and certain colleagues have insisted in enacting comprehensive legalization first.
Perlmutter addressed that reluctance from the Senate in a separate letter that was sent to Senate leadership on Tuesday.
Schumer, for his part, said last week that the timeline for the introduction of his legalization bill has been pushed back, despite saying previously that it would be formally filed this month.
As Congress continues to stall on marijuana banking reform, more state officials and lawmakers are taking steps on their own to resolve the issue, especially in light of the targeted crime surge.
Washington State Treasurer Mike Pellicciotti, has also been especially vocal about the need for congressional reform, and he wrote in a recent letter to his colleagues in other states that it’s “just not safe to have this financial volume in cash.”
He made similar remarks at a recent conference of the National Association of State Treasurers (NAST). And Colorado Treasurer Dave Young echoed that sentiment in a recent interview with Marijuana Moment.
The Pennsylvania Senate separately approved a bill last week to safeguard banks and insurers against being penalized by state regulators for working with state-legal medical marijuana businesses.
Perlmutter, for his part, has even made a point to talk about enacting the reform legislation during committee hearings on ostensibly unrelated or wider-ranging legislation, like at a recent House Rules Committee hearing.
At a recent event hosted by the American Bankers Association (ABA), the congressman said that he will “continue to be a real pest, and persistent in getting this done” before he leaves Congress.
Despite recently saying that he’s “confident” that the Senate will take up his bill this session, the congressman recognized that while he’s supportive of revisions related to criminal justice reform, taxation, research and other issues, he knows that “as we expand this thing, then we start losing votes, particularly Republican votes and we got enough votes in the Senate to do it” as is.
Ahead of last month’s ABA event, the financial group released a poll that it commissioned showing that a strong majority of Americans support freeing up banks to work with marijuana businesses without facing federal penalties.
Meanwhile, the number of banks that report working with marijuana businesses ticked up again near the end of 2021, according to recently released federal data.
It’s not clear if the increase is related to congressional moves to pass a bipartisan cannabis banking reform bill, but the figures from the Financial Crimes Enforcement Network (FinCEN) signal that financial institutions continue to feel more comfortable servicing businesses in state-legal markets.
Some Republicans are scratching their heads about how Democrats have so far failed to pass the modest banking reform with majorities in both chambers and control of the White House, too. For example, Rep. Rand Paul (R-KY) criticized his Democratic colleagues over the issue in December.
Read the letter for the Colorado and Ohio attorneys general on marijuana banking below: