The SAFE Banking Act will be discussed in the Senate banking committee on Thursday
Wednesday, May 10, 2023
By: Lynne Terry
Over the past eight years, two Oregon congressional members have pushed Congress to pass a law encouraging banks to work with cannabis companies, considered illegal businesses under federal law.
This year, they’re hopeful it will pass.
U.S. Sen. Jeff Merkley and Rep. Earl Blumenauer, both Oregon Democrats, said Wednesday in an online news briefing that the time is ripe for the SAFE Banking Act, which would pave the way for marijuana businesses to open bank accounts, pay bills electronically and conduct other financial business through a professional institution instead of using cash as they largely do now. Working in cash makes them vulnerable to crime, especially theft and assault. Merkley said it is also a magnet for fraud, money laundering and organized crime.
“None of those things are things that we want to be facilitating, which is why passing the SAFE banking bill has been such a priority of mine,” Merkley said.
The bill, sponsored by Merkley, will be discussed in the Senate banking committee on Thursday. It needs to win committee approval and then be adopted by the Senate, which is led by Democrats. After that, it would need approval in the House, where Republicans hold a slight majority.
The proposal would prevent federal regulators from:
- Prohibiting or penalizing a bank from providing financial services to a state-sanctioned cannabis business or an associated business, such as a lawyer or landlord;
- Terminating or limiting a bank’s federal deposit insurance for working with cannabis companies;
- Recommending that a bank downgrade services or stop providing them to these businesses.
The bill could have a wide impact in Oregon. Marijuana is big business in the state, accounting for $1 billion in sales over the past year, according to the Oregon Liquor and Cannabis Commission. The industry employs thousands, with more than 2,800 companies licensed with the agency, including growers, processors, wholesalers, retailers and labs. Nationwide, the industry is worth about $40 billion and employs 450,000, Blumenauer said.
Seven previous SAFE banking acts have been approved by the U.S. House, but they’ve always died in the Senate. Merkley said he’s optimistic he can round up the necessary 60 votes to get the bill passed thanks to wide acceptance of marijuana across the country.
Although marijuana is classified as a Schedule 1 substance, meaning federal authorities consider it to have no medical benefits and be prone to abuse, 38 states allow medicinal use of cannabis and 22 allow recreational use, according to the National Conference of State Legislatures. Only three states – Idaho, Nebraska and Kansas – ban all use.
“It just wasn’t that long ago that this was a very different world,” Merkley said. “But more and more states are joining the lead.”
Public support has influenced politicians, on both sides of the aisle, he said. The bill has the backing of 40 senators, including Oregon Democrat Ron Wyden and Republican Sens. Steve Daines of Montana, Rand Paul of Kentucky, Lisa Murkowski of Alaska, Dan Sullivan of Alaska, Cynthia Lummis of Wyoming, Kevin Cramer of North Dakota and Bill Cassidy of Louisiana.
Merkley said gaining the crucial backing of Republicans is easier now because they’ve seen the issue won’t hurt them at the polls.
“Nobody has suffered any political consequences in campaigns across the country because they supported the sanity of moving from a cash economy to an electronic banking economy in cannabis,” Merkley said.
After a discussion in the banking committee, members will have a chance to add amendments. Merkley said he will try to prevent the addition of “poison pills” that could deter support in the Senate.
But he does want the bill to include equity provisions. For the first time, the act “extends safe harbor” protections to community development financial institutions and minority depository institutions that serve people who have difficulty accessing capital, said Hunter Spence, a Blumenauer spokesman. Merkley also wants the bill to rectify past injustices by including a fund for states to expunge nonviolent criminal convictions for possession or use of marijuana. Although rates of use of cannabis are largely the same among Black and white Americans, Black people have been prosecuted at a far higher rate.
If the bill passes the Senate, Blumenauer and Republican Rep. Dave Joyce of Ohio will try to shepherd it through the House. Oregon Republican Rep. Lori Chavez-DeRemer has already signed on to a House version of the bill, and last year, Rep. Suzanne Bonamici was a co-sponsor.
Blumenauer doesn’t think GOP leaders would block it this time.
“There still is an overwhelming majority of House members who have voted for this in the past,” Blumenauer said. “That has not changed. And I do think that we have the opportunity to thread the needle.”