Last night, we distributed a Banker Direct in which we included the news about the U.S. House of Representatives’ passage of H.R. 1595, the SAFE Banking Act. The bill was placed on the suspension calendar (meaning it was non-controversial) and passed 321-103, with nine members not voting.
We were able to access the vote tally late last night and the Oklahoma delegation in the House split their vote as follows:
Voting yes: Cole, Hern, Horn.
Voting no: Lucas, Mullin.
Here’s some of the key language in the bill:
For purposes of … Federal law, the proceeds from a transaction conducted by a cannabis-related legitimate business or service provider shall not be considered as proceeds from an unlawful activity solely because the transaction was conducted by a cannabis-related legitimate business or service provider, as applicable.
We believe this language applies to all federal laws, including the Controlled Substances Act. We further believe this language basically eliminates the current risk of criminal prosecution for a bank, thrift or credit union that chooses to do business with, and generate revenue from, banking marijuana-related businesses.
As noted, this bill would bar federal banking regulators from penalizing any bank, thrift or credit union that chooses to provide banking services to legitimate marijuana-related businesses (that are in compliance with existing state law) in any of the following ways:
- Terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate marijuana-related business.
- Prohibiting or otherwise discouraging a depository institution from offering financial services to such a business.
- Recommending, incentivizing, or encouraging a depository institution not to offer financial services to an account holder solely because the account holder is affiliated with such a business.
- Taking any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased or sold to such a business.
- Penalizing a depository institution for processing or collecting payments for such a business.
The bill will now move to the Senate where it could be considered by the Senate Banking Committee.
In March of this year, cannabis-related legislation was not even on that committee chairman’s radar. It is now.
Sen. Mike Crapo (R-Idaho) said Wednesday this issue will, in some form, be considered by his committee. His stated purpose is to clarify the manner in which the nation’s banking industry can provide services to MRBs that are in compliance with state law. It may take the form of a separate stand-alone bill, or as an amendment to an appropriations bill.
Crapo’s concern is finding a way to avoid money laundering and getting legacy cash into the current banking system. He also expressed concern about public safety issues, which always accompany any “all-cash” business.
“This is the first time any legislation dealing with cannabis has passed the U.S. House of Representatives,” OBA President and CEO Roger Beverage said. “Most of us recognize the SAFE Act may not be the most desired approach; what makes more sense is to simply de-criminalize marijuana as a Schedule I drug, but that’s not going to happen any time soon in my view.
“In the meantime, creating this ‘safe harbor’ is a good first step to bring the cannabis industry out of the shadows and into the light of transparency. First and foremost, it will improve security and public safety by eliminating its ‘all-cash’ method of operating. It will also improve the tax collection process that’s inherent in any cash-based business and help limit tax fraud.”