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Will the US Covid-19 Stimulus Bill Include Cannabis Banking Protections?

By Alexander Beadle

Published: May 22, 2020   
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Late last week, the US House of Representatives passed a $3 trillion stimulus bill aimed at tackling the economic impact that the coronavirus pandemic has had on US citizens and businesses.

Included in the stimulus bill, named the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, is a provision that would allow banks to serve state-legal cannabis businesses without the risk of federal punishment.

This provision passed the house in a landslide last year as a standalone bill, under the name the Secure and Fair Enforcement (SAFE) Banking Act, after nearly half of the House Republicans decided to support the bill alongside their Democratic colleagues. But since then, the bill has largely languished in the Senate.

The HEROES Act passed by a much narrower margin along partisan lines, with 208 representatives in support to 199 against. Much of the criticism of the bill came from Republican representatives, who have singled out the inclusion of the SAFE Banking Act in the stimulus bill as a frivolous extra in the “parade of absurdities” that they believe the Democrat-written HEROES Act to be.

The need for the SAFE Banking Act

With cannabis still prohibited under federal law, many cannabis businesses in states with legal cannabis have been forced to operate as cash-only businesses. This is because banks largely don’t feel comfortable managing the accounts of cannabis businesses, for fear of being penalized by federal banking regulators.

If passed, the SAFE Banking Act would prohibit these federal regulators from taking enforcement actions against financial institutions for the sole reason of serving the cannabis industry in a legal state.

The SAFE Banking Act was first introduced to congress in 2017 by Sen. Jeff Merkley (D-OR) and Rep. Ed Perlmutter (D-CO), but it failed to progress to a full floor vote or hearing in either chamber. It was re-introduced in 2019 by Merkley and Sen. Cory Gardner (R-CO), in a show of bipartisan support for the bill. The bill that passed last year was the companion bill introduced to the house once more by Perlmutter.

Speaking in a rules committee hearing and on the floor of the House before the vote on the HEROES Act, Perlmutter argued the importance of including the SAFE Banking Act in the stimulus bill. By allowing cannabis businesses access to banking services, Perlmutter said, public health would be protected as fewer people would be risking contracting the virus through handling banknotes.

“Cannabis businesses across the country have been deemed essential during this pandemic, and these businesses and their estimated 243,000 employees deserve equity with other legal businesses,” he said.

“The SAFE Banking Act would address the increased health risk of spreading Covid-19 on bank notes and coins as well as the increased public risk in this cash-only industry. This bill will help protect jobs and safe lending in our communities.”

Cannabis mentioned more times than jobs, challenge Republicans

Despite Perlmutter’s argument, Republican lawmakers have largely continued to criticize the SAFE Banking Act as having no place in the stimulus bill, and the stimulus bill itself for being a “joke” and a “liberal wish-list” that is “wildly out of touch with the needs of the American people.”

In a floor speech, Senate Majority Leader Mitch McConnell (R-KY) disparaged the HEROS Act as a “totally unserious effort,” and criticized the inclusion of the SAFE Banking Act.

“The word cannabis appears in the bill 68 times,” pointed out McConnell. “More times than the word job and four times as many as the word hire.”

McConnell also specifically took issue with a requirement in the SAFE Banking Act that would require further study into diversity and equity in the cannabis industry, although he notably failed to criticize the central point of the bill, being banking access. This is possibly because five Republican senators are currently listed as cosponsors of the standalone SAFE Banking bill, including fellow Kentucky senator Rand Paul (R-KY).

Unlikely to pass in the Senate, despite bipartisan support elsewhere

Ever since the SAFE Banking Act passed in the House, the cannabis industry has been waiting for the Senate to take action. In February, Sen. Gardner said that lawmakers were close to advancing the measure with the Senate Banking Committee, and that, “in a matter of months we can have a vote on a compromise version [of the bill] in the Senate.”

While that may be true for the standalone bill, the tone of the floor speeches and social media posts by Republican lawmakers would imply that the banking provision – and maybe even the HEROES Act as a whole – will face a near-impossible task in getting through the Republican-controlled Senate.

Though while the US Senate appears to be drawing up its support or opposition to the cannabis banking bill along partisan lines, many Republican officials outside of the chamber are voicing their support for the bill.

This week, a bipartisan coalition of 34 state and territory attorneys general have urged Congress to pass the stimulus bill with the cannabis banking protections included. The coalition sent a letter to the House and Senate leadership, arguing three main points to demonstrate why the banking protections are a necessary part of the coronavirus relief package.

Firstly, echoing Perlmutter, they believe cash transactions to be a risk to public health and safety. They also note that these large cash transactions might also place other groups, such as law enforcement and tax regulators, at a greater risk of exposure to the virus. Finally, they outline how access to financial services would make it easier for states to collect tax revenues from state-legal cannabis sales, which could help in addressing economic shortfalls caused by the pandemic.

In a passage which appears designed to target the concerns of hesitant Republican lawmakers, the attorneys general stress that passing the SAFE Banking Act would not be seen as equivalent to an endorsement of federal legal cannabis, but that “rather, it reflects a recognition of the realities on the ground and an embrace of our federalist system of government that is flexible enough to accommodate divergent state approaches.”

Alexander Beadle

Science Writer

Alexander Beadle has been working as a freelance science writer since 2017 and has covered the cannabis industry for Analytical Cannabis since 2018. He has also written for our sister publication, Technology Networks, and the cannabis industry consultant firm Prohibition Partners, among others. Alexander holds a Master's in Materials Chemistry from the University of St. Andrews, where he won a Chemistry Purdie scholarship, and conducted research into zeolite crystal growth mechanisms and the action of single-molecule transistors.


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