In a stunning show of bipartisanship, the U.S. House of Representatives voted last week 321-103 to approve legislation that would allow financial institutions and insurance companies to serve legal marijuana businesses without fear of reprisal from the federal government. The SAFE Banking Act (H.R. 1595) marks the first time either the House or Senate has voted to pass cannabis legislation.
The House-approved legislation now moves to the Senate, where it is expected to face increased hurdles.
Support for the Legislation Is Coming from All Sides
It’s not surprising the marijuana industry is in support of banking reform. Barring state-legal cannabis companies from commercial banking services and insurance has created significant hurdles for marijuana business owners. The current reliance on cash transactions reduces business and consumer safety, both directly and in the long-term by reducing transparency and regulatory compliance.
By allowing lawfully conducted businesses to access banking services, the marijuana industry could see increased safety and accountability—two things that unquestionably benefit consumers.
Many banking organizations have also come out in support of cannabis banking reform. The American Bankers Association (ABA) has been a strong proponent of the change, but noted that federal protections and guidance would be needed to explicitly protect financial institutions from federal punishment for supporting state-legal marijuana businesses.
And with the recent House vote—the culmination of a six-year effort spearheaded by U.S. Rep. Ed Perlmutter (D-CO 7th District)—support from politicians appears to be at an all-time high. From 2014 to 2019, Democratic support for marijuana banking reform increased by 21 percent (43 votes), and Republican support grew by a 68 percent (46 votes). Colorado Reps. Ken Buck and Doug Lamborn both voted against the measure.
The cannabis banking legislation that passed the House doesn’t include comprehensive social justice provisions, but it would likely benefit communities negatively impacted by the war on drugs. And while the bill won’t legalize marijuana nationally even if it does pass the Senate, many strategists see financial reform as an easier first-step that would pave the way for more expansive reform.
What Happens Now?
The legislation now makes its way to the Senate, where it is expected to face greater resistance than it did in the House. There is some cause for hope, however, as the bipartisan support in the House could encourage the Senate to take a similar stance.
Similarly, some financial institutions may see the extensive House support as a clear sign that legislative changes are coming, which could result in more financial institutions being willing to serve the cannabis industry. It’s unlikely that larger banks and institutions would begin serving cannabis businesses without bicameral support, but the SAFE Banking Act represents a very real chance that could happen.