Senate Banking Committee Advances Cannabis Banking Bill with Bipartisan Support

WASHINGTON — The Senate Banking Committee on Wednesday signaled a bipartisan move forward in the quest for federal cannabis banking reform. The committee’s decision could enable financial institutions to service state-legal cannabis businesses, a monumental shift from the industry’s current reliance on cash transactions.

The 23-member committee cleared the SAFER (Secure and Fair Enforcement Regulation) Banking Act with a 14-9 vote, propelling the bill closer to a full Senate chamber discussion. It’s noteworthy that this is the inaugural approval the legislation has attained in the Senate.

Chicago-based Cresco Labs’ CEO, Charlie Bachtell, viewed the committee’s nod as a significant milestone but cautioned, “We still have a lot of work in front of us.” Bachtell hinted at potential refinements prior to the bill’s presentation for a full Senate vote. Nonetheless, he emphasized the importance of Wednesday’s progression.

The road to enactment remains uncertain. Legislative gridlock threatens the bill, particularly with the looming possibility of a government shutdown on Oct. 1, emanating from a standoff between the Democrat-majority Senate and the Republican-led House of Representatives.

Yet, the business sector lauds the bill’s progression. “The bill should, in theory, eliminate the public safety risk related to the all-cash nature of the cannabis industry,” remarked Ed Schmults, CEO of California’s StateHouse Holdings. He added that it might reduce capital costs for cannabis companies in the long run.

Unions like the International Brotherhood of Teamsters, which represents cannabis industry workers, echoed similar sentiments, highlighting the importance of worker safety and improved working conditions. The American Bankers Association (ABA) also expressed support. Rob Nichols, ABA’s President and CEO, described the existing status quo as “untenable” for all stakeholders.

Nevertheless, the committee’s session wasn’t without disagreements. Several amendments were proposed, including one from Sen. Raphael Warnock suggesting a five-year sunset clause on SAFER Banking Act policies. Another from Sen. Mike Crapo sought to revise a section of the bill. Both proposals were voted down.

The SAFER Banking Act is a rejuvenated iteration of prior cannabis banking reforms that successfully passed the House but not the Senate. The act promises a “safe harbor” for banks and credit unions interacting with state-sanctioned cannabis businesses, underlining that these institutions should maintain legal and fraud-detecting protocols.

Detractors of the bill highlight concerns over the maintenance of the Bank Secrecy Act’s stringent requirements.

As for the potential government shutdown’s ramifications, predictions are mixed. Pablo Zuanic, a cannabis equity analyst from Zuanic & Associates, believes that the act could undergo further modifications in the Senate or face a protracted process in the House.

With the House now under Republican control, which historically had other legislative focuses, the bill’s fate remains unpredictable. Cresco’s Bachtell optimistically noted the potential for a legislative compromise, stating, “It feels like compromise can be achieved.”

While the path ahead is uncertain, the underlying theme is clear: the U.S. is inching closer to addressing the cannabis industry’s banking challenges, reflecting the nation’s evolving stance on the once-tabooed plant.