fb-pixel

Marijuana Moment is a wire service assembled by Tom Angell, a marijuana legalization activist and journalist covering marijuana reform nationwide. The views expressed by Angell or Marijuana Moment are neither endorsed by the Globe nor do they reflect the Globe’s views on any subject area.

A key Senate committee met on Tuesday to discuss legislative fixes that would allow banks to service state-legal marijuana businesses without the risk of being penalized by federal financial regulators.

Senator Mike Crapo, the chair of the Senate Banking, Housing and Urban Affairs Committee which hosted the hearing, concluded that “a case has been made pretty strongly” that the issue must get resolved, but that it’s a “very important and complex issue that we need to get right.”

Advertisement



The hearing took some advocates by surprise when it was announced last week, given the senator’s previous statement that he wouldn’t commit to examining the cannabis financial services issue while the federal government still regarded marijuana as a controlled substance.

A bipartisan bill — the Secure And Fair Enforcement (SAFE) Banking Act — was a main focus of the conversation. The House version of the legislation cleared that chamber’s Financial Services Committee in March, and while advocates hoped it would go before the full chamber ahead of the August recess, expectations have shifted toward the fall for floor action.

Asked after the hearing if he’s spoken to Senate Majority Leader Mitch McConnell about the bill, Crapo said he’s “spoken to almost all of our colleagues about this.”

Crapo said the committee is “trying right now to see if we can find a way to address the various issues” ahead of a potential markup on the cannabis banking legislation and that he doesn’t “intend to hold additional hearings on the issue.”

Advertisement



Senator Sherrod Brown, ranking member of the panel, said in his opening remarks at the hearing that “no matter how you feel about marijuana itself, we have a duty to look about for the workers who work in this industry and the communities they represent.”

Witnesses who testified before the Senate committee included SAFE Banking Act sponsors Senators Cory Gardner and Jeff Merkley, Credit Union National Association representative Rachel Pross, American Bankers Association representative Joanne Sherwood, Smart Approaches To Marijuana Vice President of Government Affairs Garth Van Meter, and LivWell Enlightened Health CEO John Lord.

Advocates argue that providing banking access to cannabis businesses will increase financial transparency and mitigate safety risks. Many marijuana companies currently operate on a mostly cash basis that makes them a target.

Gardner said in his testimony that “the states are leading on this issue, and the federal government has failed to respond. It has closed its eyes and plugged its ears and pretended the issue will go away. It won’t.”

He recognized during the hearing that this “is a difficult hearing, a difficult topic. I know that.”

“But we were sent here to deal with the difficult topics,” he said. “It’s an important step forward. First hearing we’ve had on this issue as the federal government wakes up to the reality that the cannabis issue is not going to go away and we must have action.”

Republican attendance at the meeting was lacking overall, with only Crapo and Gardner appearing from the majority, raising questions about the extent to which Senate Republicans are interested in advancing cannabis banking legislation.

Advertisement



Van Meter, of Smart Approaches To Marijuana, said that members of the committee were being tasked with addressing “whether we want to promote and increase drug use during an addiction crisis or discourage drug use and help people find recovery and healing” by debating whether to provide access to banking to cannabis businesses.

“By skipping ahead to a technicality over banking rules, the marijuana industry is hoping to gain many of the benefits of federal legalization without a debate over the public health effects,” he said in testimony.

Attached to the group’s submission for the hearing was a letter expressing concern about the potential consequences of passing the SAFE Banking Act, signed by former heads of the Drug Enforcement Administration and Office of National Drug Control Policy.

Senator Brian Schatz spoke about research barriers for marijuana, noting that he cosponsored bipartisan legislation introduced last week that would address the issue.

Van Meter jumped in: “If the marijuana industry was concerned about research, then I don’t think they would be selling some of these extremely high potency” products.

“Well hang on, I’m concerned about research,” Schatz responded. “I’m going to allow you to answer the questions, but I’m not going to allow you to take a pot shot at the people that you’re testifying with.”

Other topics brought up during the meeting included the lack of access to financial services for hemp businesses since legalization of the crop under the 2018 Farm Bill, barriers to marijuana research, and ways that providing banking access to the industry could help regulators better identify illicit financial activity.

Advertisement



Banking associations representing all 50 states have voiced support for the SAFE Banking Act. Other advocates for a legislative resolution to the banking issue include a coalition of 20 bipartisan governors, the National Association of State Treasurers, top financial regulators in 25 states, and a majority of state attorneys general.

On the House side, the legislation has 206 cosponsors. The bill has 31 cosponsors in the Senate.

The banking hearing marks the sixth congressional hearing on marijuana policy this Congress, including a historic meeting of the House Judiciary Crime, Terrorism, and Homeland Security Subcommittee on pathways to end the federal prohibition of cannabis. Another committee is scheduled to discuss hemp production on Wednesday.

Watch the Senate’s marijuana banking hearing:

Read the full story on Marijuana Moment.