A revamped version of the SAFE Banking Act – now known as the SAFER Banking Act – sailed out of a Senate committee on Wednesday with a 14-9 vote. It is now headed to the full Senate floor, where Majority Leader Chuck Schumer has pledged to schedule it for a vote “very soon” in front of the full chamber.
The victory was quickly hailed as a “historic” one by several cannabis industry insiders, as well as some lawmakers, given that it’s one of very few federal marijuana policy moves that have gotten any traction in recent years despite the booming national cannabis industry.
If SAFER becomes law, it could not only throw open the U.S. banking system to marijuana businesses, but it could also give more protections to workers and ancillary businesses, allow cannabis retailers to accept credit cards, make it easier for marijuana industry insiders to obtain mortgages and other standard financial services – and have even further ripple effects, experts said.
“It’s been a long, long journey,” said Sen. Jeff Merkley of Oregon, after the Senate Committee on Banking, Housing, and Urban Affairs gave the bill the green light.
The victory wasn’t without a level of conflict, however, and its path forward is still somewhat uncertain, particularly in the GOP-controlled House of Representatives. Movement could also be hampered by the potential federal government shut down on Friday if lawmakers can’t reach a spending deal, said National Cannabis Roundtable Chairman Charlie Bachtell, who is also the CEO of multistate operator Cresco Labs (CSE: CL) (OTC: CRLBF).
“Anything can happen. It’s always a part of legislation. That’s what makes it very difficult,” Bachtell said. “Things unrelated to the subject matter can come in … and sure, a government shutdown could absolutely impact how this bill proceeds.”
But Bachtell, who’s been lobbying heavily for SAFER in Washington, D.C., said he still is optimistic about the bill’s overall chances of becoming law, compared to 2022, when SAFE came within a hair’s breadth of passing.
“There wasn’t nearly enough engagement from members of the Senate or the House to really get a solution across the finish line. It’s different in 2023. They’ve been working on this all year,” Bachtell said.
Still, it’s unclear how much the bill itself may change when it reaches the Senate floor. Several members of the Banking Committee on Wednesday offered various amendments, and though all of those failed, some lawmakers indicated they may not support the bill in a floor vote unless it does get amended.
In particular, Republicans singled out a specific section within the new version of SAFER, Section 10, which clarifies the role and responsibility of regulators related to shutting down fraudulent or risky accounts. GOP committee members offered amendments related to that section that would bar financial institutions from closing accounts or not offering services to particular industries, such as gun sellers and oil and gas companies, a holdover political battle dating back to the Obama administration.
Sen. Mike Crapo of Idaho said his amendment was “very simple, that you cannot force our financial institutions in this country to cease banking clients because their industry is disfavored.”
But it was defeated in part because Democrats argued that it would actually undermine the independence of financial regulators.
“The effect would be to undermine the ability of regulators to effectively anticipate problems in banks and correct them before they cause harm to consumers or to the bank itself,” said Sen. Jack Reed, a Rhode Island Democrat.
That policy debate is likely to be the crux of the debate between Republicans and Democrats as SAFER continues moving through Congress, Bachtell predicted.
“It’s fair to say that the Sec. 10 issue is likely the primary issue for conservatives as it relates to SAFE. They’re looking at this as a broader bill on the rights of banking regulators to influence the way that banks work with certain industries,” Bachtell said. “This is a banking bill and this is going to set policy on how the banking regulators can impact the bankability of certain industries, cannabis being one of them, but certainly not the only one.”
Republicans weren’t the only ones to voice concerns, however. Georgia Democratic Sen. Raphael Warnock said the bill would only exacerbate the “racial wealth gap” across the nation.
“I am deeply troubled that we are voting on this bill at this time,” Warnock said. “For me, it begs the question, who does this so-called SAFER Banking bill actually make safer? Certainly not the millions of Americans locked up for nonviolent drug offenses. … This bill will make life safer for bankers, for businesses, and financial institutions.”
Warnock also offered an amendment that would have inserted a sunset provision into the bill, canceling it after five years if it can’t be demonstrated that SAFER has helped repair harms wrought by the war on drugs, particularly in minority communities. But again, the amendment was defeated, despite several Democrats stating they empathized with Warnock’s concerns.
There have been indications for years – and which were echoed during Wednesday’s hearing – that SAFER doesn’t go far enough on criminal and social justice reforms for certain senators, which could still prove a stumbling block on the full Senate floor. Sen. Chris Van Hollen, a Maryland Democrat, for instance said during Wednesday’s committee hearing that he’s still on the fence about voting to pass SAFER out of the full Senate if it isn’t amended to do more on criminal justice and helping victims of the war on drugs.
Bachtell noted, even if SAFER does pass both chambers and become law, it still leaves many other cannabis policy questions unresolved.
“This is an incremental step forward. It’s an improvement. But this is not the end-all, be-all. It’s not the final, correct position for cannabis to be in at the federal level,” Bachtell said.
That didn’t stop a wave of celebrations from the broader marijuana industry, however.
Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) CEO George Archos said in an emailed statement that the SAFER committee vote is “another significant catalyst to normalize and empower the cannabis industry” and “a long overdue step forward by our elected officials.”
The United Food and Commercial Workers Union – which represents thousands of cannabis workers nationally – also applauded the move, calling it a “critical step toward creating a more secure financial future for cannabis workers.”
Ancillary marijuana businesses also rejoiced.
“In an industry where, on average, 80% of transactions are conducted in cash, which creates security risks and financial disadvantages, this landmark decision is a beacon of hope,” said Treez co-founder and CEO John Yang in a statement.
One cannabis banking company, Safe Harbor Financial (Nasdaq: SHFS), also noted in a statement that SAFER “does not solve all of the banking challenges faced by the cannabis industry.”
Because marijuana is still a Schedule 1 controlled substance under federal law, Safe Harbor CEO Sundie Seefried said, banks will still be required “to file regular reports, requiring substantial resources to ensure compliance from financial and small businesses and demanding precious operational resources.”
“Cannabis’ real golden goose is rescheduling,” Seefried said, referring to the possibility that marijuana may be moved to Schedule 3 in the near future.
In the meantime, even if SAFER succeeds, Seefried said that “the cannabis industry will remain both cash intensive at the same time it is forced to fight an active, illicit market operating in plain sight. This is simply unacceptable and more must be done to equal the playing field for these small business owners.”