Senate Bill Paves Way For Bank Funding To Budding Cannabis Industry

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A bipartisan group of Senate lawmakers are pushing legislation that would limit potential legal ramifications for banks interested in financing the marijuana industry in states where it is legal.

As specified by the bill, a depository institution shall not, under federal law, be liable or subject to forfeiture for providing a loan or other financial services to a legitimate marijuana-related business.

The bill, which is co-sponsored by Alaska Republican Sen. Lisa Murkowski and Democrat Sen. Jeff Merkley of Oregon, was introduced this month as an amendment to a sweeping reform bill that undos many of the provisions of the 2010 Dodd-Frank Act. That measure – sponsored by Republican Senator Mike Crapo of Idaho – passed the Senate last week without the cannabis protections included.

However, Merkley and Murkowski’s standalone bill – the SAFE Banking Act – picked up supporters during the process. It now has 15 cosponsors. A House version of the bill has 89.

Among other thing the legislation would prohibit a federal banking regulator from:

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; or

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.

Under state law, eight states and the District of Columbia permit adult recreational use of marijuana. Twenty-nine states, the District of Columbia, and the U.S. territories of Guam and Puerto Rico allow medical marijuana use.

In January, the Senators sent a letter to the head of the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) seeking guidance on financing in the marijuana industry that doesn’t punish banks for providing capital to businesses that are legal under state law.

“We urge FinCEN to preserve this guidance to continue to support banking infrastructure and access to financial institutions for businesses that are operating in accordance with state and local law and abiding by 8 other stated factors in your guidance,” the Senators wrote. “FinCEN’s stated priorities have allowed such businesses to conduct commerce more safely through financial institutions which reduces the use of all cash, improves public safety, and reduces fraud…. This guidance must remain intact because the risks involved in removing it are too great.”

The Senators’ letter follows Attorney General Jeff Sessions’ attack earlier this month on states’ rights to set their own cannabis laws. The Sessions decision throws into chaos years of work to create a safer, more stable market, and threatens to drive cannabis sales back underground into the dangerous black market.