Banking chair delivers blow to SAFE Banking Act legislation

Drug trafficking

The chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs yesterday appeared to reject legislation that would make it easier for credit unions and other financial institutions to serve marijuana-related businesses.

“I remain firmly opposed to efforts to legalize marijuana on the federal level, and I am opposed to legalization in the State of Idaho,” Sen. Mike Crapo, R-Idaho, said in a statement. “I also do not support the SAFE Banking Act that passed in the House of Representatives.”

The Secure and Fair Enforcement Banking Act passed the House in September with bipartisan support, and many in the cannabis and financial industries were hopeful that the Senate would hold a vote on the legislation. Federal law currently makes it illegal for credit unions and banks to accept cash deposits, process credit-card payments, clear checks or provide loans to companies in marijuana- or cannabis-related businesses.

Further, because marijuana is classified as a Schedule I drug under the Controlled Substances Act, credit unions and other financial institutions can face significant legal, operational and regulatory risks by servicing MRBs and their affiliates, which could include growers, retailers, vendors, landlords and employees—even in states where marijuana is legal.

The SAFE Banking Act would protect financial institutions from federal punishment for conducting business with MRBs.

Crapo’s opposition, however, is a blow to the legislation. Crapo oversees the banking committee’s legislative agenda, which means he has the authority to take up or reject the legislation.

In his statement, Crapo was clear he has significant concerns that the SAFE Banking Act does not address the “high level potency of marijuana, marketing tactics to children, lack of research on marijuana’s effects, and the need to prevent bad actors and cartels from using the banks to disguise ill-gotten cash to launder money into the financial system.”

Crapo did say, however, that he welcomes input from all interested parties on “how to thoughtfully address these concerns.”

The Association strongly supports the SAFE Banking Act. One of the New York Credit Union Association’s top 2020 legislative priorities is advocating for legislation at the federal level that would provide a safe harbor for financial institutions, including credit unions, serving marijuana businesses in states where it is legal to do so.

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