Earlier this month, revised versions of this bill were introduced in the House and Senate”to reform national cannabis laws and reduce the public security risk in communities throughout the country.” 2
Present Status
To-date, they’ve recruited an extra 120 co-sponsors, such as 16 further Republicans. From the 116th Congress, the bill had 202 additional co-sponsors, including 25 additional Republicans, and was approved by a vote of 321-103 (including 102 Republicans).
Senator Daines has replaced former Senator Gardner because the lead Republican co-sponsor. The recent Senate bill has 29 added co-sponsors, including six Republicans along with Daines, three of which are first-time co-sponsors: Senators Cynthia Lummis (R-WY), Bill Cassidy (R-LA), and Senator Daines . In the past Congress, the Senate version of this bill6 had just five Republican co-sponsors.
The bill is supported by leading financial services trade associations, like the American Financial Services Association and the Independent Community Bankers Association, as well as leading cannabis and hemp trade associations, such as the U.S. Cannabis Council, the Minority Cannabis Business Association, and the U.S. Hemp Roundtable.
Key Provisions
The core of the legislation is the same as the prior bill passed by the House. As an example, the profits of trades with cannabis-related legitimate businesses (CLBs) and their service providers would no longer be considered profits via an unlawful trade and thus, not money laundering, and would not be subject to forfeiture. Moreover, the bill would prohibit”federal banking regulators” from, among other things:
Terminating or restricting deposit or share insurance, or taking any adverse action against a”depository institution,” solely because the establishment provides, or has provided,”financial solutions” to CLBs or service providers of a CLB;
Prohibiting, penalizing, or discouraging a depository institution from providing financial solutions into some CLB or service provider;
Recommending, incentivizing, or encouraging a depository institution not to offer financial solutions to an account holder because of the account holder’s link to some CLB; or
Taking any adverse or corrective supervisory action to a loan made to a CLB or service provider (or their employees, owners, and operators), or to the proprietor or operator of property leased to a CLB or service supplier.
Moreover, the bill would shield businesses that perform a financial service for or in association with a depository institution. Such institutions could facilitate payments and function as a money transmitter that uses a depository institution to facilitate a payment for a CLB or support supplier. Insurance companies also are authorized to write insurance for CLBs and their service providers.
Among other matters, the Financial Crimes Enforcement Network will be bound to update its guidance regarding compulsory suspicious activity reports and the Federal Financial Institutions Examination Council would be required to issue guidance and evaluation procedures for such depository institutions.
Crucial Controls
The House and Senate bills contain important modifications from the initial laws in the prior Congress, including changes to the protections associated with hemp companies as well as also the definition of”financial solutions”:
Hemp-related Company Protections: The 2019 version directed the federal banking regulators to issue guidance”verifying the legality of hemp, hemp-derived CBD goods, along with other hemp-derived cannabinoid products, and the legality of participating in financial services with businesses selling hemp, hemp-derived CBD products, and other hemp-derived cannabinoid products.” It also implemented the a variety of protections to”hemp (such as hemp-derived cannabidiol and other hemp-derived cannabinoid goods ) in precisely the same manner as such provisions apply to cannabis. The 2021 version directs the federal banking authorities to update their existing hemp banking guidance (rather than comment on the legality of hemp-derived CBD or other hemp-derived cannabinoid products) to advise depository institutions in their Bank Secrecy Act and other national duties. It also applies the various protections to covered financial services providers who provide covered fiscal solutions to”hemp-related legitimate businesses” and support providers of these companies.
Financial Services by Depository Institutions: The 2019 version defined financial services to include the services and products listed in Section 1002 of their Dodd-Frank Wall Street Reform and Consumer Protection Act (among other providers not directly pertinent to depository institutions). The 2021 variant defines financial services to incorporate the products and services listed in Section 1002 of their Dodd-Frank Wall Street Reform and Consumer Protection Act as well as (I) any financial services or merchandise that a national credit union can offer pursuant to the Federal Credit Union Act; and (ii) any financial support or product a national bank or its financial subsidiary can provide pursuant to 12 U.S.C. § 24 (Seventh) and 12 U.S.C. § 24a, respectively )among other services not directly pertinent to depository institutions). The definition does not make reference to any services supplied by a national bank pursuant to 12 U.S.C. § 92a.
The “SAFE Banking Act” has yet to be considered during a hearing by the House Financial Services Committee. However, Congressman Perlmutter is the Chair of the Consumer Protection and Financial Institutions Subcommittee of the Financial Services Committee, so a hearing in the House could happen shortly. Despite the tight margin of control, the bipartisan support for this legislation indicates there could be sufficient votes from the House to approve this bill, either on a stand-alone or package-basis.
The dynamics in the Senate are harder given the 50-50 split between Democrats and Republicans, and an expected divergence in approach to cannabis reform within the Democratic Party. On the other hand, the significant increase in Republican support and assorted comments from Senator Pat Toomey (R-PA), the Ranking Member of the Senate Banking Committee, evincing his willingness to work on this legislation, indicate an opportunity to find 60 votes in favor. The continued addition of protections related to the hemp industry and language from the”Financial Institution Customer Protection Act” provides added incentives for bipartisan support.
