House advances marijuana banking bill, though final passage uncertain

WASHINGTON — Cannabis dispensaries throughout the country came one step closer to using banks the way many other businesses can when the U.S. House on Friday cleared a bill with sweeping changes to banking regulations. 

Colorado Democrat Ed Perlmutter and Ohio Republican Dave Joyce, co-sponsors of the legislation, said Friday their proposal would allow medical and recreational marijuana businesses in states that have legalized use to move away from the cash-only business model they’ve been forced to use by U.S. banking laws. 

“We need to bring some sense to what is really dangerous right now in this space that so many states allow for dispensaries, for grow operations,” Perlmutter said. “There’s just a lot of cash and that cash can really pose problems.” 

While the federal government has mostly left marijuana business regulation and oversight to the states that have legalized it, the nation’s banking system is controlled at the federal level. 

The federal government’s classification of marijuana as a Schedule I illegal substance, by definition something with no medical use and a high potential for abuse, means that it’s difficult for cannabis businesses to use banks. 

Some marijuana businesses have hired armored vehicles and armed guards to transfer cash to banks, an arrangement that has worked sometimes, but one that comes with more risk than if they were able to use banks the way non-cannabis businesses do. 

Others have kept their operations as cash-only, a decision that Perlmutter and Joyce said Friday can lead to upticks in robberies and other crime, even though the businesses are acting within their state laws.

The so-called SAFE Banking Act passed the House on Friday as part of a much larger, separate bill that is geared toward improving U.S. manufacturing and boosting competitiveness with China on several fronts, including semiconductors.

The proposal will, however, need to survive the conference process between the House of Representatives and the Senate.

At the moment neither Joyce or Perlmutter is sure that their provision will remain in the final package, given concerns from some Democrats, including Senate Majority Leader Chuck Schumer and New Jersey Democratic Sen. Cory Booker.

Joyce and Perlmutter said Friday that they differ with the senators about how Congress passing the banking change would impact other marijuana legislation, including bills changing the tax code, changing the criminal justice approach to marijuana, or fully legalizing the plant. 

“Our philosophy has been that you need to have something to break the ice. And in the Senate they haven’t had a hearing on cannabis – maybe one half-hearted one – since 1971, much less legislation, much less the votes,” Perlmutter said. “So our job is to familiarize them with the subject and to get them to take some action.”

Some of the Democratic senators, Perlmutter said, believe clearing banking changes will take the “wind out of the sails” on efforts to pass other changes to federal cannabis laws. So they want to broaden the legislation. 

But Joyce and Perlmutter said they believe the incremental approach is the best way to send bills to the Biden administration and are concerned that if the bill grows too much some lawmakers may no longer support its passage.

“For every person you gain, you might lose three,” Joyce said. “And so that’s why you want to continue to have a smaller framework in which you can consistently have people adding to the bill versus getting off.”

Getting the marijuana banking amendment added to the larger China competitiveness legislation represented a step forward for the 180 co-sponsors of the marijuana banking legislation, 26 of whom are Republicans. But it’s far from a guarantee. 

Backers of the legislation were able to get their language added last year as an amendment to the annual Defense Department policy bill, but it didn’t survive the conference process. The bill has also passed the House as stand-alone legislation. 

Perlmutter and Joyce said on Friday if they are blocked again in the Senate, they will keep advocating for the legislation, especially as an amendment to other must-pass bills.

“Every one of these cannabis industries are running according to the laws and regulations that were put in place by that state,” Joyce said. “So why shouldn’t the banking system treat them the same.”