Week ahead: Slim chance CUs could have clarity on pot banking by year-end

With this likely to be Congress’s final week in Washington for the year, lawmakers’ primary concern will be passing a funding bill to avoid a government shutdown late Friday night. But there’s a slim possibility that by the end of that process credit unions could have some clarity regarding providing banking services for the legal marijuana industry.

There’s a chance an upcoming criminal justice reform bill could include the STATES Act, which would provide safe harbor for credit unions and banks serving the cannabis industry, according to Ryan Donovan, chief advocacy officer at the Credit Union National Association.

The bipartisan bill, from Sens. Cory Gardner, R-Colo., and Elizabeth Warren, D-Mass., would – among other things – exempt retailers from federal prosecution in states where marijuana has been legalized, establish 21 as the legal age for use and change the law so industrial hemp is no longer considered cannabis.

A growing number of credit unions already serve the legal marijuana industry, including, most recently, Credit Union 1 in Alaska. Additional clarity from lawmakers could potentially boost the number of CUs willing to bank legal weed outlets. But credit unions shouldn’t get too excited just yet, said Donovan.

With legal marijuana still a controversial topic for many lawmakers, it’s possible the legislation won’t have enough votes to clear the first procedural hurdle in order to invoke cloture, he said. Beyond that, Donovan added, the Senate “is working with an incredibly short period of time” and Senate Majority Leader Mitch McConnell, R-Ky., may want to keep the focus on funding the federal government and not get bogged down in additional issues.

Along with the push to fund the government, the House Financial Services Committee this week will hold two hearings of interest to credit unions. One set for Thursday focuses on the dangers of continuing to ignore the national debt. The other is planned for Friday and is about housing finance reform.

Credit union trade groups are also weighing in on a proposal from the Federal Reserve regarding a faster payments network and liquidity tool for financial institutions. Both CUNA and the National Association of Federally-Insured Credit Unions have filed comment letters with the banking panel’s board of governors in support of those plans.

But representatives from both groups raised concerns in their letters that the Fed must work with credit unions to address potentially costly fraud risks while also ensuring any new payments system is interoperable with existing networks.