Major associations representing U.S. credit unions are calling on Congress to pass marijuana banking reform through must-pass defense legislation.
It’s the latest in a series of requests from lawmakers, stakeholders and advocates to advance legislation to protect financial institutions that work with state-legal cannabis businesses from being penalized by federal regulators.
Specifically, they want to see the Senate follow the House’s lead in attaching language from the Secure and Fair Enforcement (SAFE) Banking Act to the National Defense Authorization Act (NDAA).
“We take no position on legalizing or decriminalizing medicinal or recreational cannabis at either the state or federal level,” the associations said in a letter to key committee leadership. “However, credit unions operating in states where it is legal have members and member businesses 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 Credit Union National Association, Defense Credit Union Council and National Association of Federally-Insured Credit Unions signed the letter, which also touches on non-cannabis issues.
— CUNA (@CUNA) November 29, 2021
The groups, which wrote that they “strongly support” attaching SAFE Banking to NDAA, also stressed that “financial institutions that choose not to bank the cannabis industry still risk unknowingly serving those businesses in states where cannabis 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 letter continues. “Under the existing status quo, a credit union that does business with any one of these indirectly affiliated entities could unknowingly risk violating federal law.”
“Inclusion of the SAFE Banking Act puts in place necessary protections to bring revenue from state-sanctioned cannabis businesses into the financial services mainstream and, as a result, keeping communities safe,” it concludes.
While the Senate has yet to independently add the banking reform language to its version of NDAA, supporters want to see the provisions adopted by negotiators in conference for the final legislation sent to President Joe Biden’s desk.
Bipartisan members of the Senate Armed Services Committee recently sent their own letter urging leaders to include the SAFE Banking Act in the final NDAA. Shortly thereafter, U.S. senators representing Colorado made the same request in a separate letter.
The SAFE Banking Act has been approved in some form in the House five times now, but it’s so far languished in the Senate. Stakeholders have held out hope that the chamber would advance the legislation with a Democratic majority, but some key players like Senate Majority Leader Chuck Schumer (D-NY) have insisted on passing comprehensive legalization—like a reform bill he’s finalizing—first.
That said, Schumer has signaled that he’s open to enacting banking reform through NDAA if it contained social equity provisions.
Earlier this month, a bipartisan coalition of two dozen governors implored congressional leaders to finally enact marijuana banking reform through the large-scale defense legislation.
A group of small marijuana business owners also recently made the case that the incremental banking policy change could actually help support social equity efforts.
Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed last month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications now.
Meanwhile, an official with the Internal Revenue Service said last month that the agency would like to “get paid,” and it’d help if the marijuana industry had access to banks like companies in other legal markets so they could more easily comply with tax laws.
Federal data shows that many financial institutions remain hesitant to take on cannabis companies as clients, however, which is likely due to the fact that the plant is a strictly controlled substance under federal law.
Read the letter from the credit union associations on marijuana banking below: