On Sunday, the Congress’s Democratic leaders presented an annual spending bill detailed with the prevention of financial regulators, such as the United States Department of Treasury, from going after banks that work with marijuana business. The bill will be reviewed on Monday by the House Financial Services and General Government subcommittee. Changes can still be made since the bill is not finalized. The bill will not be active until the next fiscal year if approved.
The Legislation Protects Banks That Work With Marijuana Businesses
The slow increase of states — with Illinois recently successfully voting for the legalization of cannabis — leaning towards the legalization and regulation of marijuana, the need for bills such as the Congressional Funding legislation is necessary for protecting the banks. However, many banks continue to hesitate to work with the many flourishing marijuana businesses in licensing due to the fear of being federally penalties. The reluctance could be attributed to the new House bill that states:
“SEC. 633. None of the funds made available in this Act may be used to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, a producer, or a person that participates in any business or organized activity that involves handling marijuana, marijuana products, or marijuana proceeds, and engages in such activity pursuant to a law established by a State, political subdivision of a State, or Indian Tribe: Provided, That the term ‘‘State’’ means each of the several States, the District of Columbia, and any territory or possession of the United States.”
However, it strictly deals with the spending legislation that covers the Treasury Department. This will not protect the banks from “any enforcement activities carried out by the Justice Department, which is funded under a separate bill. It is also attached to the annual appropriations process, meaning it would have to be proactively renewed year after year if it is enacted. ” stated by Tom Angell, a 15-year veteran of the cannabis law reform movement, on Forbes. In Congress, a permanent proposal to protect banks from being punished for helping businesses is advancing.
Two months prior, the House Financial Services Committee approved the Secure And Fair Enforcement (SAFE) Banking Act. The similar proposal has 30 lawmakers signed on in the Senate, and while Banking Committee Chairman Mike Crapo (R) has refused to bring the bill forward to his panel for a proper hearing, so far. There were various organizations such as the National Association of State Treasurers, the National Association of Attorneys General and all 50 state banking associations who have endorsed the proposal. Although with Crapo’s statement, a number of Republican Senators who are lobbying him to give the bill some consideration.
According to the Congressional Budget Office, the legislation will generate an increase in deposits in banks and credit unions, and would ultimately lead to savings for the federal government after initial implementation expenses are accounted for. Legalization advocates agree that the spending bill language was a good sign but that the broader bill’s passage is still needed.
“The inclusion of cannabis banking reform language in the Appropriations bill is indicative of the level of support this issue has in Congress,” Morgan Fox, media relations director for the National Cannabis Industry Association, said, “If passed, this would only be a temporary fix and should not be viewed as a substitute for the SAFE Banking Act, but could provide the cannabis and banking industries with a much-needed reprieve while stand-alone legislation gains more support in the Senate.”