Despite the growing number of states that have legalized medical or recreational cannabis, overarching federal prohibition laws make most banks reluctant to work with marijuana businesses. And that means many cannabis growers and sellers conduct transactions in cash only, which makes them targets for robberies.
But that could all change under a bipartisan amendment being considered by Congress this week.
The proposal from Congressman Matt Gaetz (R-FL) and Congressman Darren Soto (D-FL) would prevent federal banking agencies from punishing financial services providers just for opening accounts for marijuana businesses that are legal under state law.
The cross-party duo is proposing the measure as an amendment to the Financial CHOICE Act of 2017, a Republican-led bill that would undo much of the Dodd-Frank financial regulation legislation that President Obama signed into law in 2010.
The marijuana banking amendment is currently pending before the House Rules Committee, which is responsible setting the procedures under which bills are considered on the House floor, including the amendments that will be allowed to be proposed for votes.
The Committee is scheduled to meet to set the rule for the Financial CHOICE Act on Tuesday at 5:00 P.M. Although the Gaetz-Soto amendment is marked as having been submitted late, it will still be put forward for the panel’s consideration, a staffer confirmed.
The Committee’s decision could be an indication of whether it will allow other marijuana amendments to be considered on the House floor later this year. Reformers are particularly concerned about advancing a measure to prohibit the U.S. Department of Justice from spending money to interfere with state medical cannabis laws similar to a rider that has been attached to annual appropriations bills since late 2014.
They also have hopes of enacting a broader amendment to prevent the Justice Department from interfering with broader full marijuana legalization laws, similar to a measure that came within just nine votes of passing the House in 2015. Since then, the number of states with legalization has doubled, and several marijuana law reform opponents who consistently opposed cannabis amendments in the past have retired and been replaced with freshman supporters.
But while spending bills have typically been brought forth with open rules under which most any member could propose any germane amendment, last year House leadership begin restricting the scope of policy riders that were allowed to come to the floor. For example, proposed amendments on banking services for marijuana businesses and Washington, D.C.’s ability to spend its own money regulating cannabis were blocked from being considered on the House floor after partisan disputes on unrelated issues like gun policy and LGBT rights threatened the passage of appropriations bills.
And last month, the panel blocked a marijuana amendment to a government-wide spending bill.
If the Gaetz-Soto amendment makes it to the floor this week, it stands a good chance of passing. A marijuana banking amendment to a Treasury Department appropriations bill passed with a bipartisan vote of 231 to 192 in 2014. Only two states had legalized marijuana by the time, a number that has now quadrupled to eight. And 29 states now have comprehensive medical cannabis laws, up from 23 at the time of the vote. (Though the rider passed the House it was not included in that year’s final enacted spending bill.)
Under the Obama administration, the U.S. Departments of Treasury and Justice issued memos intended to encourage banks to work with the marijuana industry. But because the guidance wasn’t binding and could easily be changed by future administrations, many financial services industry professionals felt that it didn’t provide enough protections and assurances needed to work with cannabis businesses.
In April, Gaetz and Soto introduced a standalone bill to move marijuana to Schedule III of the Controlled Substances Act.
There is a separate standalone cannabis banking bill in the House but Gaetz and Soto haven’t signed on as cosponsors. There is also a companion bill in the Senate. Neither have been scheduled for a hearing or vote.
Even if the Gaetz-Soto amendment is enacted and restricts the Treasury Department’s ability to punish banks for working with marijuana businesses it would still leave marijuana prohibition on the books, which the Justice Department is responsible for enforcing. It thus remains an open question as to whether it would provide enough assurance for big banks to begin working with the cannabis industry.
The Financial CHOICE Act is expected to hit the House floor as soon as Wednesday.