House includes pot banking provision in defense bill

The House of Representatives last week passed a defense spending bill that included a provision that would allow cannabis companies to access traditional banking services, a victory for banks and credit unions working in the industry. 

The House on July 14 passed the FY23 National Defense Authorization Act, an appropriations bill that sets the budget for the U.S. defense industry and funds public safety, on a vote of 329-101. 

Among many amendments tucked into the bill is the Secure and Fair Enforcement (SAFE) Banking Act, a bipartisan measure that would protect financial institutions from punishment by the government if they offer banking services to licensed businesses in the cannabis industry. 

Bloomberg News

"The purpose of this subtitle is to increase public safety by ensuring access to financial services to cannabis-related legitimate businesses and service providers and reducing the amount of cash at such businesses," the text of the amendment states. 

Up to now, for many cannabis businesses cash has been their only means of transacting as financial institutions, compliant with national law that still criminalizes cannabis activity, shunned them although the drug has been legalized in many states. Rep. Ed Perlmutter, D-Colo., the original sponsor of the SAFE Banking Act, said last month that forcing cannabis businesses to deal only in cash by excluding employees and business owners from the banking system creates a "public safety risk." He warned that “In the wake of the Senate’s inaction, people continue to be killed, businesses continue to be robbed."  

This is the seventh time that the bill has passed the House and reached the Senate, where it stalled the last six times because Senate Democrats, led by the majority leader, Chuck Schumer of New York, wanted to replace it with a comprehensive bill for legalizing the cannabis industry with broader policies to address criminal justice and social equity. Flagging support for that broader effort could mean the narrower SAFE Banking Act has a greater chance of passage as part of the defense spending bill. 

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"This is yet another opportunity for the Senate to advance common sense cannabis reforms starting with access to the banking system. I’m calling on them to take action for the safety of our communities and success of Veteran- and minority-owned businesses across the country,” Perlmutter said in a press release last week, referring to veterans and racial minorities in the cannabis business. 

Additionally, an amendment by Rep. Maxine Waters, D-Calif., was adopted in the NDAA that would allow credit unions to increase their ability to borrow funds from the Central Liquidity Facility, to up to 16 times the capital paid in from 12 times before the COVID-19 pandemic, through 2023. The CLF is a program that lets credit unions access cash if they are strapped for liquidity, which comes during a time of rising interest rates and uncertain economic pressures. 

Credit union industry leaders cheered the actions. “Allowing financial institutions to serve legal cannabis-based businesses boosts public safety, and the additional CLF flexibility will help credit unions access liquidity if needed,” Jim Nussle, president and CEO of the Credit Union National Association, said in a statement on the CUNA website.