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U.S. House Approves Marijuana Banking Reform As Part Of Defense Spending Bill



The U.S. House of Representatives on Tuesday approved an amendment to protect banks that service state-legal marijuana businesses from being penalized by federal regulators. It passed on a voice vote, and no member requested a roll call. The measure is now attached to large-scale defense spending legislation.

This action comes hours after the House Rules Committee made in order the amendment from Rep. Ed Perlmutter (D-CO) for floor consideration. It was one of numerous drug policy proposals that lawmakers had hoped to attach to the National Defense Authorization Act (NDAA).

“This will strengthen the security of our financial system in our country by keeping bad actors like foreign cartels out of the cannabis industry. But most importantly, this amendment will reduce the risk of violent crime in our communities,” Perlmutter said on the floor ahead of the vote. “By dealing in all cash, these businesses and their employees become targets for robberies, assaults, burglaries and more.”

“This is a public safety and a national security matter—very germane to the issues at hand, dealing with foreign cartels and particularly the cash that is developed by this business that leads to crime,” he added.

Rep. Mike Rogers (R-AL) said he considers the proposal to be a “fine piece of legislation,” but argued that it’s more appropriate as standalone legislation, rather than as an add-on to NDAA.

“I think what [Perlmutter is] trying to accomplish is admirable and should be accomplished, but not in the National Defense Authorization Act,” he said.

But Rep. Warren Davidson (R-OH) made the case for including the cannabis reform in the national security bill.

“I think the reason it was ruled germane by the parliamentarian is the cartels control the drug trade in the United States. And while most states have made some legal form for marijuana, the cartels still dominate the market,” he said. “And part of the reason is the cash is in the black market. Legal operations in many states cannot be banked… This is preventing us from stopping the cartels.”

Rep. Lou Correa (D-CA) also rose in support of the amendment, saying that “cannabis customers and businesses are law-abiding citizens and entities, yet they have to pay their employees, their bills and their federal taxes with cash. It just does not make sense.”

This marks the fifth time in recent years that the the House has passed the cannabis banking reform, which has enjoyed broad support both as standalone legislation and while being tucked in as provisions of broader legislation. But while advocates support the proposal, some have made clear that they want to see more comprehensive changes to marijuana laws advance first, complicating the process.

Some lawmakers—particularly on the Senate side where a legalization bill from Senate Majority Leader Chuck Schumer (D-NY) is being finalized—have insisted the banking issue should be tackled by holistically ending marijuana prohibition. They argue that it is inappropriate to pass what is seen as an industry-focused reform that helps businesses and investors while leaving unaddressed the harms of decades of racially disparate prohibition enforcement that should be addressed with equity-focused legalization.

Sen. Cory Booker (D-NJ), who is helping Schumer alongside Senate Finance Committee Chairman Ron Wyden (D-OR) to produce a final legalization bill has said he would proactively work to block any senators who attempt to get marijuana banking reform passed before enacting social justice-focused legalization legislation.

Additionally, Schumer argued in an interview with Marijuana Moment that passing the Secure and Fair Enforcement (SAFE) Banking Act first could jeopardize support for broader reform. The thinking is that Republicans and moderate Democrats who are on the fence about a bolder policy change might be less inclined to vote for it if they have an opportunity to pass the more modest financial services fix instead.

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Meanwhile, although the cannabis banking legislation is not directly connected to defense-related issues, it’s likely Perlmutter and other supporters see the must-pass NDAA as a potential vehicle for the reform that could make its way through the Senate, whereas all prior House-passed cannabis banking legislation has stalled to date.

At an initial meeting of the Rules Committee about NDAA on Monday, House Armed Services Committee Chairman Adam Smith (D-WA), who is managing the bill, acknowledged that while some members might consider certain amendments “superfluous” to defense spending matters, the annual legislation has been used as a vehicle to advance non-germane legislation in the past. He added, though, that doing so has historically required the issues at hand to have broad bipartisan support in order to survive the House-Senate conference committee process.

He didn’t specifically cite the cannabis banking proposal, but Perlmutter himself said earlier in the hearing that “whether something is superfluous is always in the eyes of the beholder,” signaling that he feels his measure’s germaneness in this context is up for interpretation.

Smith said that “whatever superfluous items the Rules Committee decides to put in order and get attached to this bill, we go to conference, and in conference, we work in a bipartisan fashion.”

“We’re not going to pull one over on anybody here. We’re going to have to work with committees of jurisdiction—not just the chairs, but the ranking members as well—to come to some agreement on those before we go forward,” he said. “So if you see an item that you consider to be superfluous being added to the bill, don’t freak out.”

The chair’s comments about needing support from leaders of committees of jurisdiction raise questions about whether the amendment stands a chance in conference with the Senate following House approval. Not only did House Financial Services Committee Ranking Member Patrick McHenry (R-NC) vote against the standalone SAFE Banking Act this year and in 2019, but on the Senate side, even Banking Committee Chairman Sherrod Brown (D-OH) has been generally unenthusiastic about advancing the reform.

On the flip side, House Finance Services Committee Chairwoman Maxine Waters (D-CA) is a supporter of the banking reform and brought it through her panel last Congress. Senate Banking Committee Ranking Member Pat Toomey (R-PA), for his part, has previously voiced support for advancing the SAFE Banking Act.

It’s been four months since the House last approved the bipartisan marijuana banking bill—but because companion legislation has stalled in the Senate, Perlmutter is getting impatient.

The congressman said that he appreciates that Senate leadership is pushing for a more comprehensive end to federal marijuana prohibition—and he agrees with Booker that promoting social equity is an important objective—but he feels the SAFE Banking Act is urgently needed to address public safety issues resulting from the industry’s lack of access to traditional financial institutions.

Some of the strongest proponents for broad reform like Rep. Earl Blumenauer (D-OR) voted in favor of the SAFE Banking Act in April despite the body yet having taken up a legalization measure this session.

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