SAFE Banking Act exempted from Defense Expenditure Act

An attempt to get the SAFE Banking Act into a much-needed defense spending bill has failed, leaving proponents looking for a way to pass legislation that would give the legal cannabis industry access to banking services. Supporters of the measure had hoped to incorporate provisions of the banking law, known as the Secure and Fair Enforcement (SAFE) Banking Act, into the National Defense Appropriations Act (NDAA), an annual spending law that funds the military. But the latest version of the NDAA, released Tuesday, did not include cannabis banking language.

Under the SAFE Banking Act, federal bank regulators would be prohibited from penalizing banks that choose to service cannabis companies that conduct business in accordance with state law. Under current regulations, banks are subject to penalties under federal money laundering and other laws for servicing such businesses, leaving the cannabis industry operating in a risky, cash-rich environment.

The law was originally introduced into the House of Representatives in 2013 by Democratic Rep. Ed Perlmutter of Colorado, who has reintroduced the legislation in each subsequent cycle of Congress. The bill has passed the House of Representatives seven times since 2019, but the Senate has failed to put the bill to a vote each time.

Another amendment, backed by advocates of cannabis policy reform that would have helped states to overturn previous marijuana-related convictions, also failed to make it into the final Defense Expenditure Act. Ahead of the NDAA’s latest text Tuesday, Senate Majority Leader Chuck Schumer of New York told reporters he was still working on passing the cannabis banking measure.

“That’s my priority,” Schumer said. “I want to finish it. We will try to discuss the best way.”

Republicans balk at adding SAFE to the defense bill

But later in the day, Senate Minority Leader Mitch McConnell of Kentucky admonished Democrats for trying to add non-defense changes to the spending bill, including the SAFE Banking Act.

“Even now, House and Senate Democrats are still obstructing efforts to shut down the NDAA by trying to pinch unrelated non-defense related issues,” McConnell said Tuesday in the Senate. “We’re talking about a grab bag of various pet priorities — like making our financial system more sympathetic to illicit drugs, or the fake, partisan language that allows ‘reforms’ in name only that hasn’t gotten the Senate through this year.”

“If Democrats wanted these controversial items that badly, they had two years to get them off the ground. Heck, they could have put these matters up for a vote this week. But no — we’re making more mid-level nominations while the Democrats are halfway threatening to hold our armed forces hostage over these irrelevant issues,” McConnell said, adding, “The Democrats’ failure to plan ahead for independent liberal pet priorities should do not create uncertainty and confusion for the brave soldiers who keep us safe. My colleagues across the aisle need to end the unrelated hostage situation and put a bipartisan NDAA on the floor.”

What’s next?

The failure to include the SAFE Banking Act in the NDAA leaves open the prospect of passage of cannabis banking legislation before the current Congress adjourned in two weeks. Morgan Fox, political director of the National Organization for Marijuana Law Reform’s cannabis policy reform group, said SAFE could be attached to a pending omnibus bill or perhaps approved as stand-alone legislation.

“I’m glad we have other options,” Fox said on Wednesday. “It’s pretty disappointing.”

“While there was momentum and optimism about including SAFE in the National Defense Authorization Act, it was known for some time that it would be a challenge to enforce it,” wrote Sahar Ayinehsazian, partner at cannabis law firm Vicente Sederberg LLP in an e- Mail to High Times. “The focus now is on the Omnibus Approval Act, which Congress is currently debating. SAFE has growing support on both sides of the aisle and I and many others in the industry who are familiar with this issue think there is still a chance that there will be movement regarding SAFE during this session of Congress on the Omnibus Act can be done.”

The SAFE Banking Act is supported by a bipartisan coalition of lawmakers made up primarily of representatives and senators from states that have legalized medical or adult-use marijuana. The law passed in the House of Representatives last year with overwhelming bipartisan support, 321 votes to 110, and senators from both parties are also in favor of passing the measure.

“The senator continues to work every day to reach a consensus so that we can pass SAFE Banking into law this year,” a spokesman for Montana Republican Senator Steve Daines said in an email Wednesday.

Senior Montana Senator Sen. Jon Tester, a Democrat, also said he “would like to see it pass this Congress.”

The banking law also has support from nearly two dozen governors in states that have liberalized marijuana policies. In a written statement, Conor Cahill, a spokesman for Colorado Gov. Jared Polis, praised Perlmutter’s work and said he expects the law to be passed later this year.

“Governor Polis has long advocated passage of the SAFE Banking Act and has repeatedly urged Congress to pass this important piece of legislation to protect cannabis businesses, support minorities, women and veteran-owned small businesses, create jobs and empower of public safety in Colorado communities and across the states,” Cahill wrote in an email Tuesday. “We hope and expect to see the final iteration of his decades-long effort at the end of the lame duck session.”