House passes pot banking amendment to spending bill

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WASHINGTON — The House passed a spending bill amendment aimed at providing further clarity to banks looking to provide services to cannabis businesses in what observers say represents yet another push for Congress to take up marijuana legislation.

The pot banking measure proposed by Rep. Earl Blumenauer, D-Ore., would bar agencies from using allotted funds to punish a financial institution “solely because the institution provides financial services” to a marijuana-related business compliant with state laws.

The spending bill, which passed an appropriations subcommittee earlier this month, would fund the government through the 2020 fiscal year.

While cannabis businesses and banks might recognize the amendment as a step forward, it’s unlikely that the provision will completely soothe financial institutions’ fears of federal enforcement.

“Adding amendments to a spending bill to protect cannabis activities from federal enforcement is helpful, but it is not the type of permanent solution that we believe is needed to open cannabis to banking services and broader capital markets,” Jaret Seiberg, an analyst with Cowen Washington Research Group, wrote in a note.

The amendment would also need to be reauthorized year after year, offering only temporary relief that most businesses would agree does not align with a long-term financial strategy. And while marijuana remains illegal at the federal level, financial regulators would still be able to enforce the prohibition so long as they did so without specified budget resources.

It remains to be seen if the Republican-controlled Senate will remove Blumenauer’s amendment once the spending bill reaches the Senate floor, but House Democrats might try and use support for the provision to push the Senate to take action on marijuana.

“Senate Majority Leader Mitch McConnell is the biggest obstacle to cannabis legislation," Seiberg said. "Democrats want to show him the level of the support that some of these measures can get. The hope is that this will open the door for the Senate to consider actual cannabis legislation later this year or next.”

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