By Kylie Jaeger
During a confirmation hearing before the Senate Finance Committee, Sen. Catherine Cortez Masto (D-NV) asked Treasury deputy secretary nominee Adewale Adeyemo whether he feels 2014 Financial Crimes Enforcement Network (FinCEN) guidance should be updated to “set expectations for financial institutions that provide services to cannabis-related industries” and what steps he would take to that end.
Adeyemo replied, “I look forward, if confirmed, to talking to my colleagues at Treasury about this important issue and thinking through what changes may be needed and doing this in a way that’s consistent with the interagency with the president’s guidance. In doing that, I look forward to consulting with you and members of this committee on our path forward.”
Under the 2014 Obama-era guidance, financial institutions were advised on how to navigate the Bank Secrecy Act for marijuana businesses operating in compliance with state law. They also received direction on reporting requirements for working with clients in the cannabis industry.
Updating that guidance would represent a positive development for state-legal cannabis markets. But financial issues within the industry would also be resolved if Congress approved a more comprehensive bill to end marijuana prohibition or standalone legislation—such as the Secure and Fair Enforcement (SAFE) Banking Act—to provide protections for banks that service these businesses from being penalized by federal regulators.
House Democratic leadership included the language of that bill in two pieces of COVID relief legislation it passed during the last Congress, in addition to approving it as a standalone measure prior to the pandemic. Lawmakers, including Speaker Nancy Pelosi (D-CA), defended the inclusion of those provisions on multiple occasions in response to GOP pushback—yet the issue is not addressed in the latest coronavirus package that advanced out of the House Budget Committee on Monday.
That’s notable considering that Democrats were accused by Republicans of pushing the issue as part of “messaging bills” that they knew could not be enacted into law last year. And now with control of both chambers of Congress and the White House, leadership seems to have given fuel to that argument by keeping cannabis banking out of legislation they intend to actually send to the president’s desk.
The other possibility, however, is that Democrats are pushing for broader reform this Congress, and they would prefer to avoid a piecemeal approach. Ending federal marijuana prohibition through a bill like the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act, for example, would represent a solution that would satisfy both social justice advocates and industry stakeholders facing banking challenges.
A trio of senators—Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ)—are in the process of drafting legislation to federally legalize cannabis. And they recently held a meeting with representatives from a variety of advocacy groups and business associations to get input on the policy change.
But passing such a bill, if it is even possible during the 117th Congress, will take additional time while many cannabis businesses continue to be forced to operate on a cash-only basis without banking protections.
Meanwhile, Morgan Fox, media relations director for the National Cannabis Industry Association, told Marijuana Moment that the lack of cannabis banking language in the new House COVID bill “is probably due to a couple factors.”
“There is more support and runway for standalone cannabis legislation now, and even though it is totally appropriate and relevant to the pandemic to include SAFE language in a COVID bill, Dems have an impetus to pass relief legislation quickly and probably want to avoid anything that is going to cause a potential conflict with Senate Republicans after the latter used cannabis banking inclusion to publicly ridicule Dems for the last six to nine months,” he said.
Further, it’s possible that Democrats would justify the exclusion of marijuana banking language in their coronavirus bill by arguing that it would not fall within the limited scope of issues that can be considered under the budget reconciliation process that they hope to pass the stimulus legislation through in the Senate. Under reconciliation, senators need a simple majority (51 votes) to pass legislation that deals with taxes, spending and debt, and can avoid delays that can usually only be overcome with a 60-vote supermajority.
But while legislators might have decided that adding banking protections for cannabis businesses wouldn’t fit the bill in that legislative process, it’s also the case that they included provisions to gradually increase the federal minimum wage to $15 dollars per hour—which some have argued is outside the scope of the reconciliation process.
In any case, advocates and lawmakers are optimistic that 2021 could be the year that federal cannabis prohibition finally ends and that ancillary problems like barriers to banking are resolved. Schumer, as Senate majority leader, has already taken steps to show that his chamber is working toward that objective as the new Congress gets underway, but what remains to be seen is how the House—which approved the MORE Act last year—will approach the issue this session-Article Courtesy of Marijuana Moment.