Dive Brief:

• The Conference of State Bank Supervisors (CSBS) is urging Congress to include cannabis banking legislation in the final version of the America COMPETES Act, a manufacturing and innovation bill.
• In letters addressed to leadership in both the Senate and House, CSBS Acting President and CEO James Cooper on Wednesday asked that language that would protect banks that serve legal cannabis businesses be included in the larger bill, which is in conference committee.
• The CSBS, which represents state financial regulators, is the latest group to throw its support behind the SAFE Banking Act’s inclusion in the manufacturing and innovation bill. A bipartisan group of two dozen senators urged the majority and minority leaders of both chambers of Congress this month to include the cannabis banking provisions in the final text of the manufacturing legislation.

Dive Insight:

Supporters of SAFE Banking, which was included in the House version of the America COMPETES Act, are hoping the innovation and manufacturing bill will be the vehicle that finally gets cannabis banking provisions to President Joe Biden’s desk.

Proponents of the SAFE Banking Act have tried and failed to tie the cannabis banking legislation to the 2022 National Defense Authorization Act (NDAA), as well as two COVID-19 relief bills.

In his letter, Cooper echoed a long-standing argument made by proponents of the SAFE Banking Act — namely, that the bill would usher in regulatory clarity to the financial services industry and address public safety concerns.

Cannabis’ designation as a Schedule 1 drug has resulted in the refusal by a majority of banks to open accounts for cannabis-related businesses, causing them to operate largely in cash only.

Cooper’s letter also addressed state-regulated money transmitters’ needs for regulatory clarity regarding cannabis businesses, adding “the adverse impact of the current inconsistency in state and federal law is not limited to depository institutions.”

“[S]tate-regulated money transmitters play an important role in the servicing of small businesses across the country by receiving funds from one party and transferring those funds to another party,” he wrote. “Leaving money transmitters out of the safe harbor provisions will perpetuate regulatory uncertainty and the public safety issues associated with cash-only operations.”

The SAFE Banking Act was introduced by Rep. Ed Perlmutter, D-CO, in 2013, and has passed in the House as stand-alone legislation five times and received backing from banking trade groups but has failed to garner similar support in the Senate.

SAFE Banking stalled in the Senate in 2019, when former Senate Banking Committee Chair Mike Crapo, R-ID, refused to hold a hearing on the bill. 

Democrats, historically, have been more open to cannabis-related bills, but a push for more comprehensive reform stymied efforts to pass SAFE Banking under the current Democratic-controlled Senate.