Because of federal prohibition, cannabis-related businesses are banned from financial services, putting banks serving those businesses at risk of federal drug charges. Although some smaller banks and credit unions will assume that risk in exchange for high fees, the majority of legal pot transactions in this country are still done in cash.
The cash-heavy industry has become a target for burglaries and robberies in states that have legalized cannabis, including Colorado. According to a 2023 report from the City of Denver, there were 162 criminal-offense incidents involving the local cannabis industry last year, accounting for 0.5 percent of the city's total crime reports. Of those 162 offenses, 156 were burglaries, while larceny accounted for the rest.
As a growing number of states legalize medical and recreational cannabis, more members of Congress have been calling for banking reform, in the interest of public safety and removing financial restrictions that prohibit business loans, tax reductions, credit-card processing and other services enjoyed by most commercial operations.
"I will say it again, regardless of how you feel about states' efforts to legalize marijuana, this bipartisan bill is necessary," Senate Banking Committee Chairman Sherrod Brown said before the Secure and Fair Enforcement Regulation Banking Act (Safer) was approved 14-9 today, September 27.
The groundbreaking move comes after a decade of slow progress in the U.S. House of Representatives and little to no movement in the Senate. But after a favorable recommendation from the Senate Banking Committee, the Safer Banking Act will finally receive a hearing on the Senate floor. If approved by the full Senate, the bill will head to the House, where cannabis banking-reform language has been approved seven different times.
“I am thrilled the Senate has finally taken up this important piece of legislation that will provide more certainty to our small businesses and marijuana industry. This is an important step, and I thank the senators who voted in favor of this bipartisan bill,” Governor Jared Polis, who pushed for such measures when he was a Colorado representative in the House, says in a statement. “This bill supports cannabis-related businesses; supports minority, women and veteran-owned small businesses; [and] will help create jobs and strengthen public safety in our communities and across the country. We look forward to seeing a full vote in the Senate and passage in the House again soon.”
This isn't the same House as in previous years, however, and there's no guarantee that the Safer Banking Act will make it that far. Past cannabis banking reform has only passed in a House controlled by Democrats, which is no longer the case, while a Senate with a Democratic majority hasn't been able to advance any meaningful cannabis reform for almost two years. Senate committee members shed light on some of these potential issues during the September 27 hearing. Here are five takeaways:
It's even safer now!
For a decade, the measure was known as the Secure and Fair Enforcement Banking Act, or the Safe Banking Act. This version — new and improved, according to senators — is the Secure and Fair Enforcement Regulation Banking Act, or the Safer Banking Act. What does this extra "r" show us, other than the size of senatorial egos? It's even safer! Can't you read?!A handful of senators alluded to actual changes in the proposal that address concerns on both sides of the aisle, including language that now covers deposit account terminations and financial account disclosures. However, other changes noted by Republicans highlight where Safer could go from here.
Republicans want to use the bill to protect guns and gas
Most of the Republicans who spoke during the hearing seemed to view the bill through the lens of protecting the gun and energy industries, not legal cannabis. Iowa Senator Mike Crapo, a longtime Republican foil of cannabis banking during his time as Banking Committee Chair, presented an amendment that would weaken federal regulatory ability to restrict financial services provided to industries under investigation. While this amendment would technically include cannabis businesses, Crapo made it clear that the move was intended to benefit gun manufacturers, utility companies and perhaps an "auto manufacturer who doesn't want to make electric cars" or other federally "disfavored" industries. The amendment failed, 8-15, with Brown and other senators arguing that it weakened regulatory power too much — but it could foreshadow conversations in the House.A handful of other Republicans made similar points by citing Operation Choke Point, an often criticized U.S. Department of Justice initiative from 2013 to 2017 that investigated banks serving firearm dealers, payday lenders and other industries believed to be at high risks of fraud and money laundering. Montana Senator Steve Daines, a Republican, said he opposed federal cannabis and legalization, but supported the Safer Banking Act for both the pot and firearm industries.
"This bill is about public safety, first and foremost," Daines said, adding that the "current all-cash models for legal cannabis business makes them targets" for crime.
Still, Daines mentioned that he looked forward to seeing his fellow Republicans "strengthen it as they see fit," noting that the bill was about "ensuring that regulators never again have an opportunity to target any legal business, including gun manufacturers and distributors or energy companies, because of political differences."
Democrats still aren't universally aligned on this
Poke us if you've heard this one before: Democrats still don't agree on a game plan for cannabis reform. Although legalization is viewed favorably by most Democratic voters, Senate priorities are still split between banking reform and restorative justice. Senator Raphael Warnock of Georgia, a Democrat, introduced several failed amendments that would require a congressional sunset on cannabis reform until communities harmed by the drug war were benefiting from legal pot revenue."I must ask my colleagues, why this bill, and why now? Who does this so-called Safer Banking bill actually make safer?" he asked during the hearing. Warnock said he supported cannabis legalization overall, but only when paired with broader social reforms.
"This bill does not do any of that," he said before voting in opposition to the measure.
Warnock's displeasure with the bill mirrors past arguments from Senator Cory Booker and Majority Leader Charles Schumer, also Democrats, who have blocked cannabis banking bills in favor of broader legalization reforms. Schumer seems more open this time around, but Massachusetts Senator Elizabeth Warren hinted at further discussions on the Senate floor.
"This bill does little or nothing to address the harms of marijuana criminalization, particularly among Black and Brown communities," Warren said before voting in favor of the bill. "This cannot be all we do."
