Senators push to pass cannabis banking bill after marijuana rescheduling

Editor’s Note: This story has been updated to reflect that Sen. Mark Warner (D-Va.) said marijuana was legal in over half the states.

A bipartisan coalition of senators behind a cannabis banking bill is pushing for a markup and working to clear key hurdles on both sides of the aisle to lock down support.

As advocates work to drum up momentum for the Secure and Fair Enforcement (SAFE) Banking Act, some proponents in the upper chamber have expressed hopes the bill could advance out of committee in the coming weeks. 

“We hope to be able to announce something in the next few days,” Senate Banking Committee Chairman Sherrod Brown (D-Ohio) told reporters this week. 

The SAFE Banking Act would give federally regulated banks and credit unions legal cover to take cannabis dispensaries and growers as customers. Financial institutions have been hesitant to serve state-legal cannabis businesses because of the federal ban on the drug.

Democrats say excitement has been building after the Department of Health and Human Services (HHS) recommended that marijuana, which is classified as a Schedule I drug, be moved to the Schedule III category.

“What happened on Schedule III was good, another potential breakthrough,” Sen. Ron Wyden (D-Ore.) said, adding: “We’re moving to finally end the days of ‘Reefer Madness.’ The federal government just been behind on pot.”

Sen. Mark Warner (D-Va.) called the HHS decision “a recognition of reality.”

“The idea that you’ve got marijuana legal in over half the states, and yet at the federal level, it’s still categorized in the same category as heroin, it seems a bit out of touch with the science,” Warner said.

But as discussions continue, Brown and other negotiators say there is still some work to do before they can lock down necessary backing from conservatives and progressives to secure passage.

“There’s still some outlying issues, minor ones, but we hope to get people on board and get a strong vote,” Brown said.

While 38 states and the District of Columbia have legalized cannabis for medical or recreational use, the possession, distribution or sale of cannabis is still illegal at the federal level. As a result, legally operating cannabis businesses are often denied access to banks.

Proponents of the bill say the SAFE Banking Act would help legally operating businesses avoid the headaches and safety risks of dealing only in cash without affecting the legal status of cannabis beyond states where it’s legal.

But despite passing the House several times in recent years, the bill has faced a bumpy road in the Senate, where it needs at least 60 votes to clear the upper chamber. Both Republicans and Democrats have expressed objections to the bill, reflecting sharp partisan divides over cannabis use and regulation beyond the financial sector.

Senators had previously sought to pass the bill as part of the larger government funding omnibus approved late last year, but talks fell apart after it faced staunch opposition from GOP leadership. 

Other rank-and-file Republicans have also been resistant to signing the bill backed strongly by marijuana advocates given their personal opposition to cannabis use.

“I don’t know if we got the votes. At least they don’t have my vote at this stage of the game,” Sen. Mike Rounds (R-S.D.), who also sits on the Banking Committee, told The Hill this week.

“I don’t think making access to marijuana at this stage of the game is necessarily helpful,” he added. 

Republicans have also raised concerns about preventing banks from cracking down on other politically controversial industries. 

“I think there’s a desire to sort of level the playing field, if you will, between things like hemp and CBD, and then there’s been some desire to — I, for one, would like to see the same premise applied obviously to banks and things like Operation Choke Point,” Sen. Kevin Cramer (R-N.D.) told The Hill, referring to the Obama-era scrutiny of bank transactions with firearms businesses.

“Try to eliminate some of that nonsense,” he said. “I think there is a discussion ripe for some compromise and some deal-making.”

Democratic negotiators say talks are still ongoing on the issue, but Sen. Jack Reed (D-R.I.), a key player in those discussions, told The Hill on Tuesday that both sides are “making progress.”

While timing around when the bill will see markup remains unclear, Sen. Steve Daines (Mont.), a key Republican in talks, told The Hill recently that he’s hopeful it will happen “sometime in September.”

“I think there’s a chance to get a markup done,” he said.

While an overwhelming majority of Senate Democrats back the bill, progressives have been wary to vote on a bill that would boost cannabis business without addressing federal drug laws.

“Robust conversations are going on that makes me very hopeful that we can get SAFE done, we can get some equity issues,” Sen. Cory Booker (D-N.J.) told The Hill on Tuesday.

Andrew Freedman, executive director of the Coalition for Cannabis Policy, Education, and Regulation, told The Hill that there are advocates who don’t believe the SAFE Banking Act should be the first cannabis bill passed by Congress.

“I think we’d rather see it be something around decriminalization. So that is definitely going be a tension all the way through with SAFE Act,” Freedman said.

Some progressives have floated adding on the Harnessing Opportunities by Pursuing Expungement (HOPE) Act, a bill offered by Reps. Dave Joyce (R-Ohio) and Alexandria Ocasio-Cortez (D-N.Y.) that seeks to help states expunge cannabis convictions. 

Pressed about HOPE this week, Booker wouldn’t get specific when discussing potential add-ons for the bill, but he stressed the need for more equity in the cannabis space.    

“My pillars: opening up the banking industry, creating more equity opportunities for women and minorities to have access to that banking industry, and trying to get some social criminal justice things done,” he said. 

Even so, the addition of social and criminal justice measures to the SAFE Banking Act could cost support from anti-cannabis Republicans and other groups who prefer to focus on the business-oriented aspects.

The American Bankers Association (ABA) is among the prominent noncannabis groups supporting the legislation.

“We’re optimistic that we will see movement on the SAFE Banking Act in the coming weeks and urge the Senate to get this bipartisan, commonsense legislation that will enhance public safety across the finish line,” Jeff Sigmund, an ABA spokesperson, told The Hill in a written statement. 

Because the possession, distribution or sale of cannabis is still illegal at the federal level, the industry is largely unbanked for fear of federal sanctions, as the ABA pointed out in a letter to Congress in May expressing its support for the bill.

This is a banking bill, not a cannabis bill, which makes it more politically palatable for some lawmakers, several lobbyists told The Hill.

“Because it deals specifically with the financial institutions, rather than the cannabis businesses, it feels — for lack of a good word — safe for a lot of these members,” David Mangone, director of policy at a federal cannabis advocacy firm called The Liaison Group told The Hill in a phone interview.