SINCE PRESIDENT Trump signed an executive order in March to reclassify state-licensed medical cannabis to Schedule III, there have been no moves in Congress to advance legislation that would enable the industry to access banking services.
Without legislation that addresses legal conflicts like banks still having to comply with the Bank Secrecy Act and anti-money laundering statutes, medical cannabis businesses still have to contend with the same banking challenges as they did before the executive order.
Typically, changes like this would be included in the SAFE Banking Act, a piece of legislation that Democrats have championed for nearly a decade, but that has never been signed into law.
The issue is important for cannabis retailers since most banks and credit unions won’t do business with them due to federal laws. Only an estimated 10% of banks and 5% of credit unions nationwide do serve cannabis operators.
The institutions that do work with cannabis-related businesses are regional players which receive safe harbor protections from local governments. Still, they charge a npremium to account for the compliance risks they face.
Prospects dim this year
The lack of movement stems from what seems to be a lack of appetite among the Republican-led majorities in both the House and the Senate to pursue anything resembling the SAFE Banking Act.
One key decision maker that the legislation would have to pass through has voted against the act in the past: Tim Scott, a Republican from South Carolina and chair of the Senate Banking Committee.
Scott recently commented on the legislation during a speech at the Milken Institute Global Conference. He said that when he last voted against the SAFE Banking Act, he had aired concerns that it could create new loopholes in anti-money laundering laws.
That, in turn, could hamper efforts to pursue criminal networks, he said.
However, more recently, Scott seemed to soften his tone. In May, according to the trade publication Marijuana Moment, he said Congress should “allow for the banking question to be solved by making it legal to [deposit cannabis proceeds in a bank].”
He added that cannabis operators holding large volumes of cash on site are ripe for illicit activities like money laundering, adding: “…There is a quandary that we have to solve. I think we’ll get to a solution.”
Another key decision-maker, Senate President John Thune, a Republican, has also voted against the SAFE Banking Act in the past and still seems inclined to keep the Senate from voting on the legislation this year, according to Cannabis Business Times.
Speaker of the House Mike Johnson has also voted against earlier versions of the bill.
Senate Support for Cannabis Banking Weakens
Additionally, the U.S. Senate is losing the main Republican voice for easing banking restrictions for cannabis businesses, Sen. Steve Daines, R-Mont., who announced in March that he won’t seek reelection for a third term.
Last Congress, he was the lead Republican sponsor for the bipartisan Secure and Fair Enforcement Regulation Banking Act.
At the time, he said no business should be shut out of banking and access to credit unions based on political differences in Washington.
Meanwhile no Democrats have stepped forth to introduce legislation, although there have been rumors that Sen. Jeff Merkley, D-Ore., might.
With the mid-term elections looming later this year, members of Congress will increasingly be focused on the looming polls rather than cannabis industry-specific legislation.