Backers of a cannabis banking bill are accusing one another of undermining its prospects for success by pushing for amendments that would expand its scope in different directions.  The SAFE Banking Act (H.R. 1595) would allow financial firms to work with state-licensed cannabis businesses without running afoul of federal anti-money laundering laws.  The bill introduced by Rep. Ed Perlmutter (D-CO) has attracted 206 co-sponsors from both sides of the aisle and advanced out of committee in March.  Senators Jeff Merkley (D-OR) and Cory Gardner (R-CO) introduced a companion version in the Senate (S. 1200) that has 30 other co-sponsors.  However, since then, lawmakers seem to have split into three camps around the bill: (i) those who support the bill as is and want to keep it narrowly tailored, (ii) those who will support the bill only if it includes banking access protections for other industries like firearms dealers, and (iii) those who appear indifferent to the bill, preferring to concentrate on broader marijuana reform.   

The cultivation and sale of marijuana remains illegal under federal law, which means that proceeds are subject to anti-money laundering laws.  As a result, most financial firms have been hesitant to work with state-authorized dispensaries and growers, forcing them to run cash-only businesses.  This makes it harder for cannabis entrepreneurs to get the start-up funds to launch new businesses and makes operating businesses a target for robbers.  However, despite the fact that polls show voters overwhelmingly support ending marijuana prohibition (65 percent of Americans support fully legalizing weed and 93 percent back medical marijuana), the legislative fix faces hurdles in the Republican-controlled Senate.

According to Don Murphy of the Marijuana Policy Project, to get Republicans on board, the bill’s sponsors would need to add an amendment that would also prevent another “Operation Choke Point,” an Obama Administration policy that used federal resources to limit the access of certain high risk industries (including payday lenders and firearms dealers) to financial institutions. 

One Republican who has been particularly outspoken on the Choke Point issue is Senate Banking Chairman Michael Crapo of Idaho, who, by virtue of his position on the Senate Banking Committee, has the power to decide whether the Merkley/Gardner bill ever gets to a markup.  The bill’s supporters were initially heartened last month when the Committee, at Crapo’s direction, held a hearing on cannabis banking.  However, Crapo concluded his opening remarks by stating, “Having a conversation about whether banks should be able to provide banking services to entities engaged in federally illegal behavior — but behavior which is legal in some states — brings up an issue and a concern of mine . . . where we’ve seen a big push to choke off legal industries from the banking sector . . . Operation Choke Point was inappropriate, and Congress needs to pass legislation to prevent future Operation Choke Point initiatives.”  To this end, we understand that the staffs of certain Republican lawmakers are drafting proposed amendments to the SAFE Banking Act that would add a provision to include other industries, such as the firearms industry, in order to prevent another Choke Point.

Since the shootings in El Paso and Dayton, some Democrats have publicly pressured financial firms and tech companies to disassociate with the firearms industry.  Senator Robert Menendez (D-NJ) sent a letter to three large tech companies urging them to stop selling gun accessories and ammo.  The letter was cosigned by eight Democrats, including two others who sit on the Senate Banking Committee with Menendez.

However, Murphy, a former Republican state legislator in Maryland, does not think the most recent shootings will change members’ positions.  While a Choke Point provision might get Crapo to consider a cannabis banking bill, his support will not matter if Senate Majority Leader Mitch McConnell (R-KY) keeps it off the Senate floor.  After a recent meeting with McConnell’s staff, Murphy stated that combining the two was the only way the bill could move forward.  “I almost cannot see a situation where Republicans vote to legalize marijuana banking while creating barriers to firearm transactions,” he said.  “It’s inconsistent.”

Meanwhile, some legalization advocates seem to be indifferent to the banking bill, preferring to focus instead on broader reforms with a social equity element.  For example, Michael Collins, director of national affairs for the Drug Policy Alliance, has indicated that his group was not opposed to the cannabis banking bills, but neither are they lobbying for it.  “To be honest, we’re not concentrating at all on the banking bill,” he said.  “It’s not a priority piece of legislation.  We’re more focused on comprehensive legislation, like the bill introduced by [Rep. Jerry] Nadler.”  Nadler, the New York Democrat who chairs the House Judiciary Committee, introduced a sweeping bill, the Marijuana Opportunity Reinvestment and Expungement Act (H.R. 3884), shortly before recess that would remove cannabis from the Controlled Substances Act, expunge prior marijuana-related convictions, and use a sales tax on marijuana to fund programs to help minorities get a start in the nascent cannabis industry.

While banking trade groups broadly support the SAFE Banking Act, representatives have declined to comment publicly on the differing legislative strategies.  The Credit Union National Association, which backs Perlmutter’s bill “as currently written,” and backed Luetkemeyer’s 2017 Choke Point prevention bill, said that, “at this time, we have no official stance on whether the two should be connected.”  In a written comment, the American Bankers Association said: “We strongly support the Safe Banking Act.  We will leave it to lawmakers to determine whether the bill is an appropriate vehicle to address other issues.”


Bruce Linskens is a Senior Analyst for International and Legislative Affairs in Baker McKenzie's Washington office. He assists clients with compliance matters extending into federal legislative, regulatory, and policy issues.