WASHINGTON—President Trump said Friday he would likely sign a bill co-authored by Sen. Elizabeth Warren, D-Mass., that would enable banks and credit unions to do business with cannabis-related companies in states where marijuana is legal.

Warren, one of the harshest critics of Trump and the banking industry, co-sponsored the legislation with Cory Gardner, R-Colo. The bill would exempt persons complying with state marijuana laws from the federal pot prohibition under the Controlled Substances Act.

“I really do, I support Senator Gardner,” Trump told reporters Friday. “I know exactly what he's doing; we're looking at it. But I probably will end up supporting that, yes.”

President Donald J. Trump
President Trump may be motivated by a desire to undermine Attorney General Jeff Sessions, who has avidly opposed marijuana legalization, even at the state level. Bloomberg News

The bill likely won’t pass the current Republican-controlled Congress, despite the fact that it only affects states that have legalized marijuana for medical or recreational purposes.

“Despite the president's remarks, we don't see the White House fighting for this legislation,” said Jaret Seiberg, an analyst with Cowen Washington Research Group. “As a result, we leave unchanged our 33% odds for action in this Congress and our 66% odds for action in next Congress.”

Despite his strained relationship with Warren, Trump may want to close a deal on legislation that benefits financial institutions. The president may also be motivated by a desire to undermine Attorney General Jeff Sessions, who has avidly opposed marijuana legalization, even at the state level.

“We suspect Trump … would prioritize closing the deal rather than letting his feud with Warren kill the bill,” Seiberg said. “Part of this as well may be another effort by the president to demean Attorney General Jeff Sessions. ... Sessions opposes state legalization. He also rescinded the Justice Department guidance on how companies could avoid trouble in states were cannabis is legal. The president has just publicly rebuked how Sessions has handled this issue.”

Banks and credit unions are often cautious in providing services to cannabis-related businesses given potential legal ramifications and conflicts between federal and state laws. The Warren-Gardner bill, known as the Strengthening the Tenth Amendment Through Entrusting States Act, or STATES Act, has also garnered support in the House from Reps. Earl Blumenauer, D-Ore., and David Joyce, R-Ohio.

Camden Fine, former chief executive of the Independent Community Bankers of America, lauded the legislation after it was introduced Thursday by Warren and Gardner.

“At its heart, this ... is a pro-states'-rights bill that remedies a business relationship problem that has vexed community banks across 46 states,” said Fine, now president and CEO of Calvert Advisors. “I strongly urge community banks nationwide to get behind the STATES Act to bring a common-sense, states'-rights approach to solving a serious and growing problem for community banks."

Neil Haggerty

Neil Haggerty is the Congress reporter for American Banker. He previously was a financial regulation reporter at MLex Market Insight.