Boost for cannabis companies? US House passes pot bill as decriminalization is weighed

The U.S. House of Representatives on Monday passed a banking bill that would remove some barriers for legal cannabis businesses amid a larger conversation about marijuana decriminalization.

The bill’s future, however, remains uncertain as it would still need to pass the U.S. Senate in order to become law. Here’s what to know.

What the bill would do

The bill, called the Secure and Fair Enforcement (SAFE) Banking Act of 2021, would bar federal regulators from penalizing banking companies for providing services to “a legitimate cannabis-related business.”

“Additionally, proceeds from a transaction involving activities of a legitimate cannabis-related business are not considered proceeds from unlawful activity,” the bill’s summary reads. “Proceeds from unlawful activity are subject to anti-money laundering laws.”

Banks could not be “liable or subject to asset forfeiture” for providing services to cannabis-related businesses.

They would also not be required to terminate a customer’s account unless “the agency has a valid reason for doing so” and “that reason is not based solely on reputation risk” related to marijuana-based activities.

Why it matters

Banks have largely avoided working with marijuana-related companies over concerns about violating federal law — meaning these companies rely on a “handful” of smaller financial companies or rely on cash to do business, according to Reuters.

More than a dozen states have legalized, to some degree, recreational marijuana use, with even more making medical allowances. But federal law still prohibits the possession, sale and distribution of weed.

“The rift between federal and state law has left banks trapped between their mission to serve the financial needs of their local communities and the threat of federal enforcement action,” the American Bankers Association said in a statement.

The SAFE Banking Act could remove a barrier toward “developing a national cannabis industry” by giving companies access to the banking industry, Axios reports.

What’s next for the bill?

The SAFE Banking Act — which passed 321-101 in the House with bipartisan support — will now head to the Senate, where its future remains unclear.

The bill has previously passed in the House multiple times to later die in the Senate.

Senate Majority Leader Chuck Schumer, a Democrat from New York, told Marijuana Moment on Monday that “certainly we have to deal with the banking and financial issues” surrounding marijuana but that “we should do them together with legalization.”

“The (SAFE Banking Act) brings in some people who might not normally support legalization, and we want to get as broad a coalition as possible,” he told the outlet.

What else has been said about the bill?

Rep. Ed Perlmutter, a Democrat from Colorado who sponsored the bill, said in a statement he’s “thrilled to see overwhelming support” for the legislation.

“I feel optimistic about the path forward for the SAFE Banking Act and, more broadly, reforms to our federal cannabis laws,” Perlmutter said. “Congress needs to act in order to catch up with the will of the majority of voters across this county and to ensure we are reducing the public safety risk for our constituents and communities.

But Rep. Patrick McHenry, a North Carolina Republican, said it would go against anti-money laundering legislation recently passed, according to MarketWatch.

And Rep. Ken Buck, a Colorado Republican, said he agrees “we must ensure legal businesses are not operating on a cash-only basis” but added that he couldn’t vote for the bill in its current form, according to the Denver Post.

“This bill opens up our banking system to abuse from drug cartels and illegal growers and distributors,” he said.

The National Organization for the Reform of Marijuana Laws, a nonprofit that advocates for marijuana law reforms, said in a statement that the bill is “only a first step.”

“The sad reality is that those who own or patronize the unbanked businesses are themselves criminals in the eyes of the federal government, which can only be addressed by removing marijuana from the list of controlled substances,” NORML said.

What else to know

The legislation comes amid larger discussions on marijuana decriminalization.

Some Senate Democrats plan to introduce more comprehensive legislation on marijuana reform.

Sens. Cory Booker of New Jersey, Ron Wyden of Oregon and Schumer said in a joint statement in February that ending federal marijuana prohibition is “necessary to right the wrongs” of the War on Drugs.

“We are committed to working together to put forward and advance comprehensive cannabis reform legislation that will not only turn the page on this sad chapter in American history, but also undo the devastating consequences of these discriminatory policies,” the statement says . “The Senate will make consideration of these reforms a priority.”

Sixteen states, the District of Columbia and two territories have “legalized small amounts of cannabis (marijuana) for adult recreational use,” according to the National Conference of State Legislatures.

Additionally, a Gallup poll conducted in late 2020 found 68% of Americans support marijuana legalization — the highest point in the past five decades.

President Joe Biden supports leaving most decisions about marijuana legalization up to states and reclassifying it as a Schedule II drug — it’s currently Schedule 1 along with drugs like heroin and LSD — so researchers can further study its effects, White House Press Secretary Jen Psaki told reporters Tuesday.

“At the federal level, he supports decriminalizing marijuana use and automatically expunging any prior criminal records,” Psaki said. “He also supports legalizing medicinal marijuana.”